Gold surpasses Euro as second-largest global reserve asset, ECB says
The precious metal made up around 20% of global official reserves at the end of 2024, overtaking the euro’s 16%, the central bank said in a report.
Gold surpassed the euro as the second largest global reserve asset at market prices last year, the European Central Bank said.
At the end of 2024, gold bullion made up around 20% of global official reserves–which comprise both foreign exchange and gold holdings–overtaking the euro’s 16%, the ECB said in a report. The increased share was driven by a combination of central bank stockpiling and record high gold prices.
Overall, central banks increased gold holdings by more than 1,000 metric tons in 2024 for the third year in a row, with purchases running at twice the average annual level seen in the 2010s.
The price of the precious metal has risen nearly 62% since the start of 2024 alone on a combination of geopolitical uncertainty, market volatility and central bank purchases, hitting an all-time high of $3,509.90 a troy ounce in mid-April. After adjusting for inflation, gold prices in 2024 surpassed their previous peak during the 1979 oil crisis.
Continuous gold futures in New York were most recently up 0.5% at $3,361.70 a troy ounce.
“Gold demand for monetary reserves surged sharply in the wake of Russia’s full-scale invasion of Ukraine in 2022 and has remained high," the ECB report said.
Around two-thirds of central banks invested in gold in order to diversify their holdings, while around two-fifths did so in order to hedge against geopolitical risk, according to the report. While gold holdings increased, the U.S. dollar still comprised the largest amount of global holdings at 46% in 2024.
Recent research indicates that imposing financial sanctions is associated with increases in central bank gold holdings, the ECB said. Countries that are geopolitically close to China and Russia have seen larger increases in gold shares of official reserves since the last quarter of 2021, and countries facing sanctions were involved in five out of 10 of the largest annual increases in foreign reserve gold holdings since 1999.
Globally, central bank holdings of gold at the end of 2024 stood at around 36,000 tons, near the all-time high of 38,000 tons set in 1965. Last year, the largest buyers were Poland, Turkey, India and China, as well as the State Oil Fund of Azerbaijan, according to figures from the World Gold Council.
Write to Joseph Hoppe at joseph.hoppe@wsj.com
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