Gold vs US Treasuries holdings in global Central Bank reserves

Central banks, particularly in emerging markets, have been increasing their gold holdings at record levels over the past few years at the expense of US Treasuries. This trend has been driven by a desire to reduce reliance on the US dollar for several reasons.

Since 1996 US Treasuries have been the principal reserve assets of central banks around the world due to the stability and depth of the US market. They are considered one of the lowest-risk investments globally in terms of default risk because they are backed by the creditworthiness of the US government. The US Treasury market is the largest and most liquid in the world, allowing central banks to easily buy or sell large quantities without significantly impacting prices.

However, in October 2025 the share of gold surpassed US Treasuries in percentage terms in global central banks reserve holdings. This begs the question: Why are countries willingly reducing their holdings of the very asset that has been the bedrock of the global financial system? The answer lies in a complex web of several factors including geopolitical risks, monetary policy and, above all, the slow erosion of trusts in America’s economic leadership. The increasing perception of irresponsible fiscal management of successive US governments has gradually eroded that very creditworthiness that allows the US dollar to be the primary global reserve currency.