Central Banks Shift Reserves: Gold Overtakes Euro, Dollar Declines

Gold has officially surpassed the Euro as the second-largest reserve asset globally, according to a recent report by the European Central Bank. This shift indicates that central banks are increasingly turning to gold as a stabilizing asset amidst global uncertainty. While the U.S. dollar remains the primary reserve currency, its dominance has diminished over recent years. Currently, gold accounts for 19.6% of the world's central bank reserves, surpassing the euro, which now holds 15.9%. The rising prominence of gold follows a strong rally in 2024, fueled by demand for safe-haven assets. Concurrently, the U.S. dollar's share of global reserves has decreased from over 60% in 2016 to 46.5% today. This trend reflects a cautious approach by central banks, favoring tangible assets like gold over reliance on fiat currencies, particularly in turbulent economic conditions.