Gold has reclaimed a position many thought it had long lost, with the European Central Bank's latest report showing gold accounted for 27% of global official reserve assets at the end of 2025, surpassing US Treasuries at 22% and the euro at 15%. According to the ECB's analysis, this marks a dramatic shift in the composition of global reserves and highlights the growing importance of gold in a world increasingly shaped by geopolitical tensions, sanctions risks and financial fragmentation. However, the central bank cautions that a significant portion of gold's rise reflects its extraordinary price appreciation, with gold prices surging roughly 30% in 2024 and another 60% in 2025. When adjusted for valuation effects using gold prices from the end of 2023, gold's share falls to around 16%, roughly in line with the euro's share, while US Treasuries remain the largest reserve asset at approximately 26%.
Central banks have demonstrated unprecedented commitment to gold accumulation, with the ECB noting that central banks have purchased more than 1,000 tonnes of gold annually for three consecutive years, a pace more than double the average annual purchases recorded during the decade preceding Russia's invasion of Ukraine in 2022. According to the report, official-sector demand has become one of the most important drivers of the gold market, with central bank purchases accounting for more than 20% of global gold demand in 2025, compared with roughly 10% during the 2010s. This trend suggests reserve managers are actively reassessing the composition of their portfolios rather than merely benefiting from rising prices. The shift accelerated after Western nations froze a significant portion of Russia's foreign exchange reserves following its invasion of Ukraine, highlighting the risk that reserve assets held abroad could become inaccessible during periods of geopolitical conflict.
The global shift comes at a time when the Reserve Bank of India has also been steadily increasing its gold holdings, with India's gold reserves standing at 880.52 metric tonnes at the end of March 2026, according to the RBI's FY26 Annual Report. Gold accounted for 16.7% of India's total foreign exchange reserves, up sharply from 9.3% in September 2024. The RBI has also increased the proportion of gold stored domestically, with nearly 77% of India's gold stockpile now held within the country, compared with 66% six months earlier. This mirrors a broader global trend in which central banks are placing greater emphasis on physical gold ownership and custody, as unlike foreign government bonds or bank deposits, gold has no issuer and no counterparty, cannot be defaulted on, frozen by a foreign government, or rendered inaccessible through sanctions if held domestically.
The trend extends beyond traditional sovereign institutions, with Tether, the issuer of the world's largest stablecoin, emerging as one of the largest buyers of gold in 2025, according to the ECB report. Tether's gold purchases exceeded those of several sovereign nations, underscoring how gold is increasingly being used as a reserve asset across a broader range of financial institutions. This reflects a growing convergence between traditional reserve management and parts of the digital asset ecosystem, where gold continues to be viewed as a trusted store of value. The ECB's findings do not suggest that the dollar is losing its dominant position in the global financial system, as the US dollar remains the world's leading reserve currency and continues to play a central role in global trade and finance, but points to an important shift in how reserve managers think about risk, with geopolitical considerations playing a much larger role in reserve management decisions.
The ECB's analysis finds that countries geopolitically closer to China and Russia have increased their gold purchases more aggressively since 2022 than other nations, suggesting that reserve managers increasingly view gold not merely as a financial asset but as a strategic asset that provides protection against geopolitical shocks. As wars, sanctions and strategic rivalries reshape the global economy, central banks are increasingly turning to an asset that sits outside the traditional financial system. The Reserve Bank of India's experience mirrors this broader global trend, with the central bank holding 880.52 metric tonnes of gold as of March 31, 2026, and the RBI purchasing a small amount of 0.13 tonnes in January 2026 after a four-month pause. Bloomberg Economics suggests the RBI will likely continue rebuilding forex reserves wherever conditions allow, with periods of dollar weakness, renewed foreign-capital inflows, or lower oil prices creating opportunities to add to foreign-currency assets.
