Central banks now hold more gold than US bonds for first time in 30 years

For the first time in over three decades, central banks around the world are holding more gold than US government bonds, marking a major shift in how countries manage their reserves. Traditionally, most nations kept their "treasure chest" of reserves filled with US dollars, some euros, and American government bonds, known as Treasuries, along with a smaller share of gold. But now, gold has taken the lead. According to the European Central Bank’s ‘International Role of the Euro 2025’ report, central banks collectively hold over 36,000 tonnes of gold. At current prices, this stockpile is worth over $3.6 trillion. That is against $3.8 trillion they hold in US Treasuries, based on the US Treasury’s June 2024 survey. The change has been driven largely by gold prices, which have soared above $3,500 an ounce this year, according to Reuters data. The big question is why central banks are turning to gold. Experts point to three main reasons. First, gold cannot be frozen or seized. After Russia’s dollar and euro reserves were blocked in 2022 following its war in Ukraine, countries began seeking "sanctions-proof" assets. Second, concerns are growing about America’s rising debt levels, making many central banks cautious about keeping too much of their reserves in US bonds. And third, diversification plays a role, as central banks want to spread risk by holding a mix of currencies and gold. The numbers show how strong this trend has been. Data from the World Gold Council (WGC) reveals that central banks bought 1,082 tonnes of gold in 2022, 1,037 tonnes in 2023, and 1,045 tonnes in 2024.  (IANS)

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