In a historic shift driven by aggressive central bank buying and soaring prices, gold has overtaken US Treasury bonds as the world’s largest foreign reserve asset. This marks the first time since 1996 that the value of gold held by foreign official institutions has exceeded that of their US debt holdings.
According to the latest data from the World Gold Council (WGC), the total value of gold held by foreign central banks is now approaching $4 trillion, slightly exceeding their approximately $3.9 trillion holdings of US Treasuries. This milestone coincides with a dramatic rally in gold prices, which briefly breached the $4,500-per-ounce milestone in a year-end surge. The precious metal ended 2025 with a gain of nearly 70%, bolstered by geopolitical tensions and concerns over fiscal sustainability, which significantly enhanced its safe-haven appeal.
The momentum has carried into 2026. On Wednesday, January 7, gold prices again briefly touched $4,500 an ounce before paring gains. In the first week of the new year, gold advanced by 3.6%, extending last year’s scorching rally.
Undeterred by record-high prices, central banks have continued to accumulate bullion. The WGC forecasts net central bank purchases reached another 1,000 tonnes in 2025. Analysts view this trend as a structural shift in global reserve management, with foreign governments pivoting away from dollar-denominated assets toward gold.
In a report last year, J.P. Morgan linked this shift—termed “de-dollarization”—to the broader standing of the United States. “Increased polarization in the US could jeopardize its governance, which underpins its role as a global safe haven,” the bank noted. Against this backdrop, gold—traditionally seen as a safer alternative to fiat currencies with no counterparty risk—has gained prominence. Foreign central banks have been buying the metal at a rapid pace over the past four years to hedge against potential geopolitical fallout.
Central bank demand remained robust late last year. Marissa Salim, Senior Research Lead, APAC at the World Gold Council, noted that net global purchases totaled 45 tonnes in November, with the National Bank of Poland leading net buying for the second consecutive month. “Central bank gold demand remained firm in November,” she said. “Year-to-date figures reached 297t, as emerging-market central banks continued their significant gold buying this year.”
In December, J.P. Morgan predicted that central bank buying will remain a key pillar of support for the gold market in 2026. “Even with three consecutive years of more than 1,000 tonnes of central bank gold purchases, the structural trend of higher central bank buying has further to run in 2026,” wrote J.P. Morgan Global Research. The firm projects central bank purchases of 755 tonnes in 2026—below the peak above 1,000 tonnes seen in the past three years but still well above the pre-2022 average of 400–500 tonnes.
The report characterized the expected decline in tonnage as a “mechanical change” rather than a structural shift. “With prices around $4,000/oz and above, central banks simply don’t need to purchase as many tonnes of gold to move their gold share to the desired percentage,” it explained. Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan, reinforced the positive outlook: “We believe central bank demand will remain elevated next year and have been encouraged by strong buying in the third quarter of 2025, even with much higher gold prices.”
