Central Banks Boost Gold Reserves Over US Treasuries Amid Rising Uncertainty

• Central banks’ gold purchases exceed 1,000 tons annually for the third year, bolstering reserves against currency risks.

• Gold prices hit a record $4,300 per ounce in October 2025, marking a 50% year-to-date gain despite recent corrections.

• Key buyers like China’s People’s Bank of China have added gold for 11 straight months, signaling a broader move away from US dollar dominance, with global holdings at one-fifth of all mined gold.

Discover why central banks are prioritizing gold reserves over US Treasuries in 2025 amid economic uncertainty. Explore the surge in bullion demand and its implications for global finance—stay informed on this pivotal shift today.

What Are Central Banks’ Gold Reserves Doing in 2025?

Central banks’ gold reserves have reached a historic milestone in 2025, surpassing holdings of US Treasuries for the first time since the early 1990s. This development underscores a strategic pivot toward precious metals as a hedge against inflation, geopolitical risks, and dollar volatility. According to Bloomberg’s analysis, central banks now control over 36,000 tons of gold, valued at more than $3 trillion, reflecting sustained buying that began accelerating post-2022.

How Has Geopolitical Tension Influenced Central Banks’ Shift to Gold?

Geopolitical events, particularly Russia’s 2022 invasion of Ukraine, prompted Western sanctions that froze significant foreign reserves, highlighting vulnerabilities in dollar-centric assets. Central banks responded by ramping up gold acquisitions, with net purchases marking 15 consecutive years of buying. The World Gold Council data shows that in 2024, global central banks acquired over 1,000 tons of bullion for the third straight year, maintaining roughly one-fifth of all gold ever mined. This diversification effort has intensified in 2025, as institutions seek stability outside traditional reserve currencies.

Emerging markets, outside the Bretton Woods framework that pegged the dollar to gold post-World War II, lead this trend. For instance, the People’s Bank of China has consistently increased its gold holdings for 11 months through September 2025. Bloomberg reports that China aims to position itself as a custodian for foreign sovereign gold reserves, further elevating the metal’s strategic role. Expert analysis from Torsten Slok, chief economist at Apollo Global Management, notes in a recent research paper that China’s actions—through central bank buying, arbitrage trading, and heightened household demand—play a pivotal role in driving gold prices higher.

Traditionally, much of the world’s official gold resides in secure vaults like those of the Bank of England, which safeguard over 5,000 tons. This centralized storage underscores gold’s enduring appeal as a neutral, tangible asset. Morgan Stanley Research has updated its 2026 gold price forecast to $4,400 per ounce, up from $3,313, anticipating a 10% rise from early October 2025 levels. Amy Gower, Metals and Mining Commodity Strategist at Morgan Stanley, explains, “We see further upside in gold, driven by a falling US dollar, strong ETF buying, continued central bank purchases, and a backdrop of uncertainty supporting demand for this safe-haven asset.”

Gold’s performance during crises reinforces its value: it surpassed $1,000 per ounce in the 2008 financial meltdown, reached $2,000 amid the COVID-19 pandemic, and climbed to $3,000 following tariff escalations earlier in 2025. These thresholds demonstrate gold’s inverse correlation with market turmoil, making it a preferred choice for reserve managers.

Central Banks gold accumulation chart. Source: Apollo Academy.

How Are Tariffs, Inflation, and Fed Rate Cuts Impacting Gold Reserves?

Tariffs from the Trump administration have elevated import costs worldwide, stoking inflation fears and prompting central banks to fortify gold reserves. The World Gold Council highlights that these policies heighten the risk of elevated consumer prices, eroding trust in fiat currencies. President Trump’s critiques of the Federal Reserve and advocacy for looser monetary policy have further questioned the bank’s autonomy, driving investors toward gold.

Market expectations point to continued Fed rate cuts in 2025 amid rising economic uncertainty. Historical patterns indicate gold prices typically rise about 6% on average within two months of a rate-cutting cycle’s onset. Gower from Morgan Stanley affirms, “With all these factors, it probably comes as no surprise that gold is right up at the top of our order of preference among commodities.”

The US dollar’s depreciation has amplified gold’s allure, as the metal is denominated in dollars—a weaker greenback enhances affordability for international buyers. In mid-September 2025, the dollar hit its lowest point in over three years against major currencies, correlating with a spike in gold-backed exchange-traded fund holdings, which reached three-year highs in October per Bloomberg data.

Gold’s price trajectory in 2025 has been remarkable: it first broke $4,000 per ounce on October 10, peaking at a record $4,300 before a sharp 6% correction on October 21—the steepest one-day drop in over a decade, as noted by Cryptopolitan. Despite this pullback, gold remains 2025’s top-performing asset, with a 50% year-to-date increase, underscoring its resilience.

Central banks’ embrace of gold extends beyond purchases; it signals a reconfiguration of global finance. By prioritizing bullion over US Treasuries, these institutions mitigate risks from sanctions, trade wars, and monetary policy shifts. Data from the World Gold Council emphasizes that this buying spree not only stabilizes national economies but also influences commodity markets broadly.

Frequently Asked Questions

What Factors Are Driving Central Banks to Increase Gold Reserves in 2025?

Key drivers include geopolitical risks, such as sanctions on Russia, which exposed dollar reserve vulnerabilities, and rising inflation from tariffs. Central banks have bought over 1,000 tons annually for three years, per World Gold Council figures, to diversify and hedge against currency devaluation, with gold now comprising a larger share of global reserves than US Treasuries.

Why Is Gold Performing Strongly Despite Recent Price Corrections?

Gold’s strength stems from its role as a safe-haven during uncertainty, bolstered by central bank demand and a weakening dollar. Even after dropping 6% post its $4,300 peak, it has gained 50% year-to-date. Fed rate cut expectations and ETF inflows continue to support prices, making it a resilient asset for investors worldwide.

Key Takeaways

• Historic Shift in Reserves: Central banks hold more gold than US Treasuries for the first time in decades, with over 36,000 tons signaling reduced dollar reliance.
• Sustained Buying Momentum: Net purchases of 1,000+ tons yearly, led by China, reflect diversification strategies amid trade tensions and sanctions.
• Future Price Upside: Forecasts predict $4,400 per ounce by 2026; monitor Fed policies and global events for investment opportunities in this safe-haven metal.

Conclusion

In 2025, central banks’ gold reserves have eclipsed US Treasuries, marking a profound evolution in global finance driven by geopolitical caution and economic pressures. With sustained buying from institutions like China’s People’s Bank of China and supportive factors such as Fed rate cuts and dollar weakness, gold’s trajectory as a premier safe-haven remains robust. As uncertainties persist, investors should consider gold’s proven track record—stay vigilant for how these central banks’ gold reserves trends shape future markets and portfolio strategies.