Kitco
02 Jun 2026, 18:36 UTC · 2h ago
Central banks see gold as the reserve asset of choice - ECB report
Kitco
02 Jun 2026, 18:36 UTC · 2h ago
Story key points
5 claims · impact-rated
Gold has overtaken U.S. Treasuries as the largest share of global reserve assets, reaching approximately 27% of reserves. — This marks a structural shift in global reserve preferences, signaling reduced dominance of the USD and a long-term bullish floor for gold.
+0.60Central banks are increasing gold holdings as a geopolitical hedge and a way to diversify away from 'weaponized' G7 currencies. — Persistent institutional demand driven by geopolitical risk creates a strong fundamental support level for gold prices.
+0.50The ECB argues that gold's rise in reserve shares is largely due to valuation effects from price surges rather than purely physical accumulation. — This suggests that the shift in reserve composition is mechanical rather than a deliberate policy pivot, potentially tempering bullish sentiment.
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The ECB cautions that gold's role as a reserve asset is limited by its volatility, lack of yield, storage costs, and inelastic supply. — These fundamental disadvantages act as a ceiling to how much central banks can realistically replace fiat currencies with gold.
-0.20Central bank gold purchases slowed slightly to 863 tonnes last year, but the World Gold Council expects steady demand of around 850 tonnes this year. — While a slight deceleration, the continued high volume of official buying provides a consistent tailwind for the asset.
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Model heads
The head of research for WisdomTree is cited providing a bullish outlook on central bank gold demand.
The president of the company is cited as an expert providing a bullish perspective on gold as a reserve asset.
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Reuters
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