Gold Surpasses the Euro as a Global Reserve
- ccancino3
- Jul 3
- 4 min read
Based on a recent report from the European Central Bank (ECB), gold has outperformed the Euro, making it the second largest reserve in the global financial system, and this event marks a profound shift in the global monetary architecture: Whereas the US dollar remains the dominant currency, gold -an asset with no counterparty risk and free of sanctions- has gained prominence as a strategic refuge in an increasingly uncertain global environment.
The rise of gold is not only due to the rise in its price, but to a deliberate reconfiguration of the reserves by central banks seeking to protect themselves from geopolitical instability and the concentration of power in Western currencies.
Gold Rises. The Euro Falls.
In 2023 the euro and gold were tied in second place, with 16.5% of the world's total central bank reserves; In 2024, gold increased to 20% of the total reserves, surpassing the Euro, which decreased to 16%. Gold is in second position, just behind the US Dollar, which maintains its leadership with 46% of total global reserves.
When the Euro was introduced in 1999, many viewed it as a strong competitor to the US Dollar on the global monetary scene. However, its share of global reserves has been steadily declining. Falling from around 25% in its early years, to just 16% by 2024. This loss reflects not only the lack of fiscal and political integration within the Eurozone, but also the declining international confidence in its long-term stability in the face of domestic economic and political crises.
Composition of Global Official Reserves (%)
Gold is now the second most important reserve asset for central banks
The Dollar and the Loss of Confidence
The magnitude of this change is considerable, and its impact goes beyond the Euro: In 2018, the Dollar represented almost 55% of the world's total central bank reserves. By 2023, its share had already fallen to 48%; and by 2024 its position declined to 46% of the total global reserves.
On the other hand, the participation of gold has grown rapidly, especially in recent years, going from representing 11.6% of total reserves in 2018 to the aforementioned 20% by the end of 2024.
What's Behind These Movements?
The ECB indicated that gold is gaining greater appeal among emerging and developing countries concerned about the impact of sanctions and the potential erosion of the role of major currencies (dollar, euro) in the international monetary system.
As a result, for the 1st consecutive year, in 2024 central banks bought more than a thousand tons of gold, which represents 20% of the world's annual production. This has raised total reserves to 36,000 tons, approaching the peak level recorded during the Bretton Woods system in the 1960s.
Among the main gold buyers are China, India, Türkiye and Poland, economies that have sought to reduce their exposure to dollar-denominated assets for the reasons mentioned above.
Gold: Geopolitical Shelter
Gold does not yield interest and has considerable logistical costs, however, Its value lies in its neutrality: it does not depend on the stability of any government nor can it be blocked by unilateral decisions.
Since the Russian invasion of Ukraine in 2022, the confiscation of dollar reserves has set off international alarm bells. If this happened to a military power like Russia, what guarantee do other developing nations have?
In fact, the ECB report points out that 5 of the 10 largest increases in gold reserves since 1999, have occurred in countries that were facing sanctions that year or the previous year.
Gold has become a response to systemic uncertainty. Today, purchases are no longer just an inflation hedge, but a protection against political risks and disruptions in the global order.
Gold: Future Basis of the Financial System?
The price of gold has reflected this new institutional demand. In 2024, its price rose by almost 30%, and so far in 2025, it has risen another 27%, reaching an all-time high of US$3,500 per ounce. This rally isn't purely speculative: It is the result of the accumulation by central banks, who now see gold as a structural asset, not a temporary one.
A survey of the World Gold Council, carried out between February and May 2025 among 73 Central Banks, reveals that 95% of respondents expect global gold reserves to increase over the next 12 months.
In addition, 43% of these institutions indicated that they plan to expand their gold reserves during that same period, which represents a record, according to the survey. The main reasons: protection against sanctions, possible transformations in the global monetary system, and the need to diversify beyond the US Dollar.
A Sign of Profound Change
The rise of gold as the world's second largest reserve currency is not a fleeting phenomenon, but rather a symptom of a developing multipolar world. The dollar's hegemony is beginning to be challenged not by another currency, but by an ancient, tangible, neutral asset that is resistant to political pressure. In this way, gold is strengthened as a strategic pillar of a new international financial order.
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