It was widely reported that gold has overtaken US Treasuries as ‘the world’s leading reserve asset’.
The source for the news is a European Central Bank report entitled ‘The international role of the euro, June 2026.’
According to the ECB report, the share of gold in total official foreign reserves (consisting of gold and foreign exchange reserves) has increased to 27% by the end of 2025, surpassing reserves of the euro (15%) and US Treasuries (22%).
However, as the ECB makes clear, “this development largely reflects valuation effects” given that “the gold price surged by around 60% and 30% in 2025 and 2024 respectively, which mechanically increases the share of gold in total official foreign reserves”.
“Correcting for such valuation effects by using the gold price at the end of 2023,” gives a quite different result, with the share of the euro and of gold both at 16% of total official foreign exchange reserves, with Treasuries taking a higher share at 26%.
Accumulation not substitution
Of course, we should not overcorrect. Factors driving demand for gold are also drivers of the gold price, and thus the dominance of gold as a share of the value of total foreign reserves is significant. And central banks have been hungry for gold in recent years.
Central banks have been persistent buyers, and the drivers, including geopolitics, sanctions risk and a push for diversification, are real. But nor is it a story of wholesale substitution.
As the ECB notes, “Central bank gold purchases slowed in 2025, partly reflecting historically high gold prices and strong private investor demand, but remained elevated.” In other words, reserve managers are behaving much as one would expect: not chasing gold at any price, and not walking away from dollar assets.
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