*“Gold overtakes euro as global reserve asset, ECB says”* *Gold Surpasses Euro: According to the European Central Bank (ECB), gold has become the world’s second most important reserve asset for central banks, overtaking the euro. Gold now accounts for 20% of global official reserves, behind the US dollar (46%) and ahead of the euro (16%).* Record Central Bank Buying: Central banks acquired over 1,000 tonnes of gold in 2024 for the third consecutive year—double the annual amount from the 2010s and about one-fifth of total global gold production. Historic Reserve Levels: Central bank gold reserves are at 36,000 tonnes, nearing the postwar Bretton Woods peak of 38,000 tonnes seen in the mid-1960s. Price Surge: Gold’s share of reserves rose alongside a 30% price increase last year, and an additional 27% rise in 2024, pushing prices to a record $3,500/oz. Safe Haven & De-dollarisation: Despite no yield and storage costs, gold is prized for its liquidity, safety, and insulation from counterparty risk and sanctions. Central banks—especially in developing countries—are diversifying away from the US dollar due to concerns over geopolitical risks and US debt. De-dollarisation accelerated after Western sanctions on Russia. Sanctions as a Catalyst: Five of the ten largest gold reserve increases since 1999 were linked to countries facing sanctions. Nations close to China and Russia have notably increased gold reserves since 2022. Motivations: A survey of 57 central banks found the main reasons for holding gold include fear of sanctions, expectations of changes in the global monetary system, and a desire to reduce US dollar dependence. Changing Correlations: Traditionally, gold fell when real yields rose, but since early 2022, gold has increasingly served as a hedge against political rather than inflation risk. Outlook: The ECB notes that higher prices have historically driven increased supply and official demand, implying the trend could continue. Key Takeaway: Gold’s role as a strategic reserve asset is rising rapidly, driven by geopolitical uncertainty, de-dollarisation, and central bank diversification—now surpassing the euro and second only to the US dollar in global reserves.