Gold has overtaken the euro to become the world’s second most-held reserve asset—behind only the U.S. dollar—according to a new report from the European Central Bank (ECB). The shift reflects record central bank purchases and a sharp rise in gold prices.

In its annual currency review, the ECB revealed that by the end of 2024, gold accounted for around 20% of global official reserves, edging out the euro’s 16% share. The U.S. dollar remained in the top spot, though its share slipped slightly to 46%.

“Central banks continued to accumulate gold at a record pace,” the ECB wrote. For the third year in a row, global gold purchases topped 1,000 metric tons—twice the pace seen in the 2010s.

Central bank gold holdings are now nearing historic highs. The current global total stands at 36,000 metric tons, just below the 38,000-ton peak reached in the mid-1960s during the Bretton Woods era.

According to the World Gold Council, the biggest buyers in 2024 were Poland, Turkey, India, and China—together responsible for about 25% of total central bank gold purchases.

Gold’s rising share in reserves is closely tied to its price surge. The metal gained nearly 30% in 2024 and hit an all-time high of $3,500 per ounce in April 2025.

Geopolitical Shifts Driving Gold Demand

The ECB also pointed to global tensions as a major reason why more central banks are moving away from the dollar and increasing their gold holdings.

Gold demand spiked after Russia’s invasion of Ukraine in 2022, the report notes. Since then, central banks have increasingly turned to gold as a hedge against sanctions and financial uncertainty—a trend that has continued into 2025.

An ECB survey showed that about two-thirds of central banks are buying gold for portfolio diversification, and 40% cited geopolitical risk as a key motivation.

Countries with closer ties to China and Russia have seen the biggest increases in gold reserves since late 2021, reflecting a broader trend of “de-dollarization” across emerging markets.

Interestingly, the usual inverse relationship between gold prices and real interest rates began to break down in 2022. The ECB believes this shift reflects a new focus on gold as protection against geopolitical and sanctions risk—not just inflation or interest rate changes.

Looking ahead, that trend appears likely to continue. The ECB reports that 80% of central bank reserve managers consider geopolitics a major factor influencing their gold strategy over the next 5 to 10 years.

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