- Gold has overtaken U.S. Treasuries as the top reserve asset for central banks.
- Rising debt, inflation, and geopolitical risks are driving institutional demand for gold.
- You can protect your finances from the same uncertainty faced by central banks with physical gold in a Gold IRA.
Gold Moves Ahead of U.S. Treasuries
A major shift is underway in the global financial system. For the first time in 30 years, gold has surpassed U.S. Treasuries as the largest foreign reserve asset held by central banks. Today, foreign central banks hold nearly $4 trillion worth of gold, compared to roughly $3.9 trillion in U.S. Treasury holdings.1
This change did not happen overnight. Central banks move slowly and deliberately. When they make a shift of this size, it reflects long-term thinking about risk, stability, and preservation of value. When the world’s most powerful financial institutions quietly change course, it is often because they see risks coming that everyday Americans will feel later.
Why Central Banks Are Rebalancing Reserves
At the core of this shift is trust. U.S. Treasuries have long been viewed as one of the safest assets in the world. That perception is now being reassessed. U.S. policy uncertainty has increased due to debt, inflation, and changing trade policies.
The U.S. national debt has surpassed $38 trillion. The government is forced to issue ever more bonds at higher yields, raising default and inflation fears and crowding out private borrowers. Treasuries’ safe-haven appeal is reduced relative to other assets.
Gold offers something Treasuries cannot. It carries no counterparty risk. It cannot default. It cannot be diluted by policy decisions. It cannot be frozen or restricted by sanctions. In periods of cumulative instability, these traits matter more than yield.
Geopolitical stress has also played a role. Conflicts in the Middle East during 2025 added what many described as a fear premium to gold prices. In early 2026, events such as the U.S. capture of Venezuelan President Nicolás Maduro and unrest tied to inflation pressures further boosted demand for gold and silver. These events reinforced gold’s role as a neutral asset during global uncertainty.
Gold Prices Reflect Institutional Demand
Gold prices have responded to this surge in demand. During a rally late in 2025, gold broke through the $4,500 per ounce level. That year marked the strongest annual performance for gold since 1979, with prices surging 65 percent. Momentum continued into early 2026, with prices rising another 3.6 percent.3
Forecasts tied to safety demand suggest gold could reach $4,800 per ounce or higher in 2026. Some analysts are projecting an average near $5,000 per ounce by year end. 4
Central Banks Continue Buying at Record Levels
Despite a record rise in prices during 2025, central banks kept buying gold. Global central banks bought 220 tons of gold in the third quarter of 2025 alone. That was up 28 percent from the prior quarter and above the 5-year quarterly average.5
Over the past 4 years, gold purchases have accelerated sharply. Net central bank purchases exceeded 1,000 tonnes in 2025. Major buyers include China, India, Turkey, and Qatar.
Global central bank gold reserves now stand between 36,000 and 37,000 tonnes. Gold represents about 26 percent of total official reserves. It now accounts for more of global reserve value than the Euro, Yen, and Pound combined.6
What This Means for the Dollar
For central banks today, diversification effectively means de-dollarization. Governments are seeking to reduce exposure to the U.S. dollar because of growing risks, including rising debt levels, political polarization, fiscal uncertainty, and the potential use of financial sanctions.
The dollar is no longer viewed as the single dominant store of value. Instead, it is becoming one option among many. Rivals include other currencies, gold, and even newer alternatives like crypto.
While the dollar is still widely used in global trade and settlement, its role as the unquestioned reserve anchor is fading. Its share of global currency reserves has fallen to roughly 40 percent. It is at the lowest level in at least 20 years and down 18 percentage points over the past decade. 7
As demand for dollars declines, U.S. influence and long-standing economic advantage tied to reserve currency status weakens as well. This shift can become self-reinforcing. As central banks reduce dollar holdings, demand for U.S. debt softens. Lower demand puts downward pressure on the dollar’s value. And a weaker dollar further discourages reserve accumulation, accelerating the move toward alternatives like gold. In 2025, the U.S. Dollar Index fell more than 9%, its worst performance in eight years.8
Conclusion
Central banks are moving away from the dollar and towards gold. They are protecting their reserves from long term risks like inflation and market instability, risks that also affect everyday Americans. Gold offers a tangible, stable asset outside political or fiscal pressures. You can protect your savings the same way by owning physical gold or a Gold IRA. Call American Hartford Gold at 800-462-0071 today to learn more.
