The total market value of gold held by global central banks will surpass that of U.S. Treasury bonds for the first time in 2025, a situation that has not occurred in nearly thirty years since 1996, marking a fundamental change in the international reserve landscape.
In 2025, a historic turning point unfolded in the international financial market: the total market value of gold reserves held by global central banks exceeded that of their U.S. Treasury bond holdings for the first time. This change did not happen overnight but is the result of multiple forces acting over a long period.
According to the latest statistics, for the first time since 1996, gold's share in the reserves of various central banks has surpassed that of U.S. Treasury bonds. By the end of 2025, the estimated value of gold reserves held by non-U.S. central banks is approximately $3.93 trillion, officially surpassing the amount of U.S. Treasury bonds held.
1. Historic Moment
● The international reserve asset landscape is undergoing a milestone transformation. In 2025, a historic turning point quietly arrived: the total market value of gold reserves held by global central banks surpassed that of their U.S. Treasury bonds for the first time.
● This change breaks a nearly thirty-year pattern, with gold surpassing U.S. Treasury bonds in the reserves of various central banks for the first time since 1996. Capital flow data reveals this trend: As of the end of June 2025, foreign central banks held approximately $3.9 trillion in U.S. Treasury bonds, while the total market value of gold reserves has climbed to about $4.2 trillion as gold prices continue to rise.
● Behind the price fluctuations, global central banks' interest in gold allocation continues to heat up. A 2025 survey by the World Gold Council shows that 95% of surveyed central banks expect global official gold reserves to continue increasing in the next 12 months, the highest proportion in nearly six years.
2. Changes in Reserve Patterns
The comparison of global central bank gold reserves and U.S. Treasury bond holdings serves as a mirror reflecting the evolution of the international financial order. This change reflects both market price fluctuations and reveals a structural shift in asset allocation.
● In the second quarter of 2025, the total value of global central bank gold reserves surpassed the scale of their U.S. Treasury bond holdings for the first time. Gold is replacing U.S. Treasury bonds as a preferred safe-haven asset in the eyes of various countries.
● According to data from the World Gold Council, in June 2025, global official gold reserves increased by a net 22 tons, marking a slight month-on-month rise for the third consecutive month. In the first half of 2025, global central banks net purchased 123 tons of gold.
3. Multiple Driving Factors
The shift of global central banks towards gold is the result of multiple factors acting together. These factors intertwine to create a strong impetus for gold purchases.
● First is the crisis of trust in the U.S. dollar. Following the escalation of the Ukraine crisis in 2022, the U.S. imposed high-intensity financial sanctions on other countries in conjunction with some nations, breaking the default consensus on the "safety" of the dollar as an international reserve asset. Dollar reserves may also be "weaponized."
● Second is the U.S. debt issue. By the end of 2024, the U.S. federal government debt-to-GDP ratio had reached 124.3%. More concerning is that as the debt base expands and interest rates rise, interest payments have become the fastest-growing part of the U.S. federal budget.
● Political polarization in the U.S. has also led to increased policy uncertainty, undermining the stability foundation of the dollar as a global reserve currency.
4. Emerging Economies Lead the Way
● In this global "gold rush," emerging economies have played a key role. Since the 2008 financial crisis, the willingness of emerging economies to purchase gold has significantly increased. Yang Zirong from the Chinese Academy of Social Sciences analyzes that the differentiation in reserve asset choices reflects the underlying political logic. Countries further from U.S. politics tend to have a stronger willingness to purchase gold.
● The reason lies in the low trust in the dollar-dominated financial system among countries with tense relations with the U.S., especially after the U.S. frequently employs financial sanctions, increasing the "geopolitical risk" associated with dollar assets.
● Taking China as an example, the People's Bank of China has increased its gold holdings for the 10th consecutive month, with gold reserves reaching 74.02 million ounces by the end of August 2025, and the proportion of gold reserves to foreign exchange reserves has risen to 7.64%, setting a new historical high.
5. Unique Advantages of Gold
● Against the backdrop of the diminishing luster of traditional safe-haven assets, gold's unique properties make it stand out. Unlike other assets, gold does not constitute any party's debt obligation. When investors hold government bonds, other sovereign bonds, or even currencies, they are essentially buying the credit of the corresponding economy. The core appeal of gold lies in its detachment from government liabilities.
● Bart Melek, head of commodity strategy at TD Securities, points out that gold has no counterparty risk, "it has intrinsic value and does not rely on governments or private institutions to fulfill debt obligations."
● Shaokai Fan, head of global central banks at the World Gold Council, further notes: "The gold market is large, highly liquid, and has non-political attributes—its supply is limited by natural reserves and is not tied to specific political risks."
6. Trust Crisis in U.S. Treasury Bonds
U.S. Treasury bonds were once considered "risk-free assets" in the global financial market, but this status is now facing unprecedented challenges. The deterioration of the U.S. fiscal situation is the fundamental reason.
● As of the 2025 fiscal year, the U.S. debt-to-GDP ratio has reached approximately 125%. Even more concerning is that as the debt base expands and interest rates rise, interest payments have become the fastest-growing part of the U.S. federal budget.
● For the first time in history, the U.S. has simultaneously lost the highest sovereign credit ratings from the three major international credit rating agencies—Standard & Poor's, Moody's, and Fitch. This series of downgrades is an authoritative confirmation of the fundamental erosion of market confidence in the U.S.
● The reasons for the downgrades from rating agencies are highly consistent, pointing to several core issues: unsustainable debt trajectory, ever-expanding interest costs, and deteriorating governance capacity and political stability.
7. Reshaping the Relationship Between Gold and U.S. Treasury Bonds
The relationship between gold and U.S. Treasury bonds is undergoing a fundamental change. Traditionally, the two have been viewed as mutually substitutable asset classes, but new dynamics are taking the lead.
● The root of this shift lies in the "de facto default" of U.S. sovereignty—this concept does not refer to a technical failure to pay but rather to a systematic and profound erosion of market confidence in the sustainability of U.S. fiscal policy and political stability.
● In this context, gold's role is no longer merely as a substitute for U.S. Treasury bonds based on opportunity cost considerations; it is being actively used as the ultimate tool to hedge against the risks of "risk-free assets" themselves.
● When real yields decline, especially when they fall to zero or negative territory, the returns from holding bonds become negligible, even unable to withstand inflation. At this point, the opportunity cost of holding gold sharply declines or even disappears.
8. Future Trend Outlook
● The preference of global central banks for gold is expected to continue. The World Gold Council's "2025 Global Central Bank Gold Reserve Survey" shows that nearly 43% of central banks plan to increase their gold reserves in the coming year. Even as gold prices reach new highs and global central banks have net purchased gold for 15 consecutive years, central banks remain keen on gold.
● Notably, 59% of surveyed central banks indicated that their gold reserves are stored domestically, up from 41% in 2024. This reflects central banks' heightened concern for the security of reserve assets.
● 73% of surveyed central banks expect the share of the dollar in global reserves to moderately or significantly decline in the next five years. The surveyed central banks also believe that the shares of other currencies such as the euro and the renminbi, as well as gold, will rise in global reserves over the next five years.
The proportion of central banks repatriating gold reserves jumped from 41% in 2024 to 59% in 2025. Gold stored in London and New York vaults is being quietly transported back to their home countries, reflecting not only a geographical shift but also a manifestation of sovereign will.
As 73% of central banks expect the share of dollar reserves to continue to decline, this technical adjustment that began with reserve asset allocation has evolved into a collective vote on the future of the international monetary system. The financial attributes of gold are being redefined—it is no longer merely a means of storing value but an important symbol of national financial sovereignty.
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