Why are foreign governments buying more gold than US Treasuries?

Governments are increasing gold holdings due to its rapid price appreciation and its appeal as a safe-haven asset amid global uncertainty.

How much gold do foreign central banks hold?

Foreign central banks hold over 900 million troy ounces of gold, valued at approximately $3.82 trillion as of November.

What is the value of US Treasuries held by foreign governments?

Foreign governments held nearly $3.88 trillion in U.S. Treasuries as of October, making gold reserves a close competitor.

Home / Business and Economy / Gold Surpasses Treasuries in Global Reserves

Gold Surpasses Treasuries in Global Reserves

7 Jan

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Summary

Gold holdings now rival US Treasuries for foreign governments.
Gold's value reached $3.82 trillion by November 30.
Gold prices surged 66% last year, driving the shift.

Gold Surpasses Treasuries in Global Reserves

Foreign governments' reserve holdings of gold are now virtually tied with U.S. Treasuries, marking a significant shift in global financial strategy. As of November, official gold holdings abroad amounted to over 900 million troy ounces, valued at $3.82 trillion. This figure closely rivals the nearly $3.88 trillion in long- and short-term Treasuries held by foreign governments as of October.

The surge in gold's appeal is largely due to its price appreciation, which climbed by 66% last year. This performance has made gold a preferred haven asset amid global economic uncertainty and geopolitical tensions. The shift may also reflect a strategic move by central banks to reduce exposure to the U.S. financial system, potentially due to currency devaluation concerns or fears of sanctions.

While some analysts predict continued strength for gold, others caution that the recent rally, driven by retail demand, could dissipate. Factors such as U.S. monetary policy, inflation rates, and the strength of the U.S. dollar will influence gold's long-term trajectory. Central bank buying trends will also be crucial in determining whether gold solidifies its position as the leading reserve asset.