Why Are Central Banks Holding More Gold Than US Bonds After 30 Years?

New Delhi, Aug 31 (NationPress) For the first time in over three decades, central banks globally are now holding more gold than US government bonds. This represents a significant transition in how nations manage their reserves.

Historically, most countries maintained their reserve “treasure chest” predominantly filled with US dollars, some euros, and American government bonds, commonly referred to as Treasuries, alongside a smaller portion of gold. However, gold has now emerged as the primary asset.

As per the European Central Bank’s ‘International Role of the Euro 2025’ report, central banks collectively possess approximately 36,000 tonnes of gold.

At current market values, this stockpile exceeds 3.6 trillion dollars, surpassing the 3.8 trillion dollars held in US Treasuries, based on the US Treasury’s June 2024 survey.

This shift has been largely fueled by soaring gold prices, which have surged above 3,500 dollars an ounce this year, according to data from Reuters.

The pressing question is why central banks are gravitating towards gold. Experts cite three primary reasons: Firstly, gold cannot be frozen or seized.

In light of Russia’s dollar and euro reserves being blocked in 2022 due to its conflict in Ukraine, nations began to seek out “sanctions-proof” assets.

Secondly, rising concerns regarding America’s increasing debt levels have made many central banks wary of holding excessive reserves in US bonds.

Lastly, diversification is key, as central banks aim to mitigate risk by maintaining a mix of currencies and gold.

The data underscores the strength of this trend. According to the World Gold Council (WGC), central banks acquired 1,082 tonnes of gold in 2022, 1,037 tonnes in 2023, and 1,045 tonnes in 2024.

These numbers are more than double the annual acquisitions seen a decade ago. Although the pace slowed slightly in 2025, it remained robust, with 244 tonnes added in the first quarter and 166 tonnes in the second.

Analysts from Metals Focus, a consultancy based in London, predict total purchases for the year will reach around 1,000 tonnes.

Surveys indicate that this trend is likely to persist. The WGC’s ‘Central Bank Gold Reserves Survey 2025’ indicates that 43 percent of central bankers intend to increase their gold holdings in the coming year, while 95 percent believe that global gold reserves will continue to rise.

India has also been progressively boosting its gold reserves. By March 2025, the Reserve Bank of India held about 880 tonnes of gold, accounting for roughly 12 percent of the nation’s total reserves.

This strategy bolsters confidence in the rupee during periods of currency instability.

However, it also intensifies domestic pressure, as rising global prices clash with India’s historically strong domestic demand for gold.