You’d be forgiven for missing it, but gold has overtaken the euro as the world’s second-most held reserve asset.
It now makes up 20% of global central bank reserves. The euro lags behind at 16%. The dollar still sits at the top, for now, but its share is steadily eroding.
In 2024 alone, central banks bought over 1,000 tonnes of gold. That’s a fifth of total global production. This is the third year in a row they’ve done it. You have to ask why? Why the push to own gold?
Well, the countries that are upping the ante when it comes to holding assets outside of the fiat system are those same nations that understand the value of monetary sovereignty, especially in a world where reserves can be frozen at the stroke of a sanctions pen.
They’re buying gold because it doesn’t require permission or a monetary system in order to still have value. And (most importantly) it can’t be frozen or caught in diplomatic crossfires.
Speaking of which, this week the gold price is doing just fine, despite recent headlines that might suggest otherwise.
We’ve had tentative diplomatic breakthroughs. The US and China have agreed, in principle, to scale back some of the more aggressive export controls on strategic materials. There’s even been talk of easing semiconductor restrictions and China lifting some barriers on rare earth exports.
But even as those headlines hit, Beijing imposed new short-term limits on rare-earth exports to American firms. As usual, the trade narrative is being pulled in two directions. Progress, then provocation. Normalisation, followed by another layer of uncertainty.
Markets have stopped taking these announcements at face value. And investors, understandably, are opting for assets that don’t rely on political goodwill to hold their value.
At the same time, inflation is softening. May’s CPI numbers in the US came in below expectations, and core inflation slowed too. Normally, you’d expect that to take the wind out of gold’s sails..and yet, the price keeps rising.
Why? Because gold’s appeal in this cycle isn’t just about inflation. It’s about risk. Currency risk. Policy risk. Institutional credibility.
Trump’s trade agenda, which now includes a set of “reciprocal” tariffs allowed to remain in place pending appeal, has only added to that. His administration is openly pursuing a weaker dollar. It’s a tactic designed to boost exports, but it leaves foreign holders of dollar assets uneasy.
So gold becomes the release valve. As Saxo Bank put it this week, “Gold trades higher despite the easing of US-China tensions, with focus on today’s US inflation print, investor appetite for US Treasuries, continued central bank demand, and ongoing demand for investment metals.”
That last point matters. This rally isn’t speculative froth, there is a purpose to the gold investment happening right now.
Even the ECB, in a moment of straight-faced contradiction, warned that rising gold demand might now pose a “financial stability risk.” Then, a few pages later, calmly confirmed that gold is one of the most systemically important assets in the world.
What we’re seeing is not a gold standard by name, but something close to one in behaviour. Central banks are treating gold like money again, because it’s the only thing left that doesn’t carry counterparty risk.
This week on GoldCoreTV, we dig into the contradiction at the heart of all this. Why the institutions that built the fiat system are quietly hedging against it. Why the West refuses to follow. And why gold is having a very good year, even in a world where inflation is falling and diplomacy is supposedly improving.
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