Central bank buying and price surge push gold to second-largest global reserve asset

Gold has overtaken the euro to become the world’s second-largest reserve asset. The precious metal’s share in global reserves has touched a three-decade high as central banks continue to increase their holdings amid global uncertainty and rising prices.As per CNBC Awaaz report, gold’s share in international reserves rose by three percentage points to 24% in the first quarter of 2025.

This marks the third consecutive year of growth. In comparison, the euro remains at about 15%, while the US dollar continues to be the largest reserve asset.

The report highlighted that the US dollar’s share has dropped by nearly two percentage points to 42%, its lowest level since the mid-1990s.While the dollar still accounts for nearly half of the global reserves, experts believe its share will gradually decline over the next few years.

Why central banks are buying gold?

The rise in gold reserves is attributed to two main factors:

• A rally in gold prices, which has increased the value of holdings.
• Continued accumulation by central banks seeking a safe-haven asset in times of economic and geopolitical volatility.

The World Gold Council (WGC) noted that gold’s resilience in crises, its role as a store of value, and its portfolio diversification benefits are key reasons behind its growing prominence.

Outlook for global reserves

According to CNBC Awaaz, most central banks expect their reserve holdings to expand further. Many believe the share of the US dollar will fall, while the euro, Chinese renminbi, and gold will gain.

The WGC survey cited in the report shows:

• About 40% of central banks expect the euro’s share to rise above 15%.
• Nearly 60% anticipate an increase in the renminbi’s share, which currently stands at 2%.

Despite these trends, analysts maintain that the dollar will remain the leading global reserve asset, though its share could gradually erode over time.