In June 2026, the European Central Bank confirmed in its annual report on the international role of the euro that gold had overtaken US Treasury securities as the world's most widely held central bank reserve asset. The headline reverberated across financial media: for the first time since the Bretton Woods era, gold was king. But on September 3, 2026 — just one day before this analysis was written — the Federal Reserve published a FEDS Note by economist Colin Weiss that challenges the narrative at its core. The reality, Weiss argues, is far more nuanced than the headlines suggest, and understanding why matters for anyone trying to read the future of the dollar, gold prices, and global capital flows.
The numbers behind the headline
The raw figures are striking. At end-2025, the market value of world gold reserves reached $5.1 trillion, according to the International Monetary Fund's International Financial Statistics, while foreign official holdings of US Treasury securities stood at $3.9 trillion, per Treasury International Capital (TIC) data. That gap — $1.2 trillion — is what fueled the "gold overtakes Treasuries" narrative, amplified by a European Central Bank report and subsequently by the World Gold Council's annual Central Bank Gold Reserves Survey, which found that 89% of reserve managers expect global central bank gold holdings to continue increasing over the next 12 months. The WGC survey, conducted between February and May 2026 with a record 76 central bank respondents, also revealed that a record 45% of respondents plan to increase their own institution's gold reserves. On the surface, this looks like a structural, irreversible shift away from dollar-denominated assets.
But Weiss's Fed analysis dismantles the comparison on two fundamental grounds. First, the surge in the market value of gold reserves since 2024 was primarily driven by a jump in gold prices — and that price jump was largely fueled by private sector demand, not official purchases. Physical gold-backed ETFs saw massive inflows beginning in late 2024, pushing gold prices to 53 new all-time highs in 2025 alone. While central bank purchases did increase substantially in 2022 — reaching 1,092 tonnes that year and averaging roughly 1,000 tonnes annually since — they merely maintained an elevated pace. It was private investors, not reserve managers, who drove the repricing. The World Gold Council's own data confirms this: total gold demand in 2025 exceeded 5,000 tonnes for the first time, but central bank purchases of 863 tonnes accounted for less than 18% of that total. The price surge that inflated gold's reserve value was a market phenomenon, not a policy decision.
Second, and perhaps more critically, the headline comparison includes gold holdings that are not the result of any recent strategic choice. The five largest holders of gold — the United States, Germany, Italy, France, and the International Monetary Fund — account for approximately 52% of total world gold reserves. None of these entities have accumulated gold in any meaningful amount since the 1970s, when the Bretton Woods system effectively collapsed. The United States alone holds 22% of global gold reserves, yet the US government cannot hold Treasury securities as international reserves — the comparison is structurally asymmetric. Stripping out US gold holdings, world gold reserves were $0.8 to $1.1 trillion below the headline figure throughout much of 2025. And by June 2026, according to the Fed's analysis, foreign official holdings of Treasuries had already surpassed world gold reserves excluding the US, despite continued increases in gold tonnage held by other central banks.
What the dollar share actually tells us
The Currency Composition of Official Foreign Exchange Reserves (COFER), tracked by the IMF, shows that the US dollar's share of allocated global reserves fell to 56.77% in Q4 2025, down from 56.93% the previous quarter and from over 71% at the turn of the millennium. Total global reserves stood at $13.14 trillion. The trajectory is unmistakable: a gradual, decades-long decline, not a sudden collapse. And crucially, this decline has not flowed proportionally into other currencies — it has partly flowed into gold, partly into other assets, and partly into the general expansion of central bank balance sheets.
The countries actively diversifying away from Treasuries tell their own story. China's holdings of US Treasury securities fell to $651.1 billion in April 2026, an 18-year low according to TIC data, down from a peak of over $1.3 trillion in 2013 — a decline of roughly 50%. The People's Bank of China has bought gold for 21 consecutive months, adding 60 tonnes in 2026 alone, bringing official reserves to approximately 2,366 tonnes. Yet gold still represents only about 8% of China's total reserves, and its Treasury holdings, while declining, remain the second-largest foreign official position after Japan. The shift is real, but it is measured, not dramatic. Poland has been even more aggressive, accumulating 90 tonnes of gold in 2026 year-to-date — the most of any central bank — and reaching 640 tonnes against a target of 700.
The deeper question is not whether gold has "overtaken" Treasuries — the Fed's analysis shows that, excluding legacy Bretton Woods holdings and adjusting for valuation effects, it has not — but whether the conditions that made Treasury securities the default reserve asset for six decades are eroding. The Fed's Weiss notes that most of the world's gold reserves were acquired before 1971, while most foreign official holdings of Treasuries were accumulated after 2000. The two asset classes serve different functions in different portfolios for different reasons. Gold provides a hedge against geopolitical risk, sanctions exposure, and inflation — the WGC survey found that 90% of central bankers now cite gold's crisis performance as their top reason for holding it, with 85% of emerging market respondents specifically citing geopolitical risk. Treasuries provide yield, liquidity, and a deep secondary market. The narrative of a zero-sum displacement obscures the reality: central banks are building parallel reserves, not replacing one with the other.
For investors, the practical takeaway is this. The gold price has been supported by both official and private demand, and that support is likely to persist — 83% of surveyed central bankers expect gold to represent a higher share of reserves in five years. But the structural decline of the dollar in reserve portfolios remains slow, and Treasuries continue to dominate when legacy holdings and valuation effects are stripped away. The real shift is not gold replacing Treasuries — it is the slow, steady diversification of a $13 trillion reserve pool away from any single asset or currency. That shift has been underway since 2000, and it will continue long after the current cycle of gold buying fades from headlines.
Sources
1. **Federal Reserve FEDS Notes** — Colin Weiss, "Why Gold Didn't Actually Overtake Treasury Securities as the World's 'Favorite' Reserve Asset" (September 3, 2026). Primary source. https://www.federalreserve.gov/econres/notes/feds-notes/why-gold-didnt-actually-overtake-treasury-securities-as-the-worlds-favorite-reserve-asset-20260903.html
2. **IMF COFER Data Brief** — Currency Composition of Official Foreign Exchange Reserves, Q4 2025 (March 26, 2026). https://data.imf.org/en/news/imf+data+brief+march+27
3. **World Gold Council** — "Central Bank Gold Statistics: Central banks make positive headlines on gold" (September 2026). https://www.gold.org/goldhub/gold-focus/2026/09/central-bank-gold-statistics-central-banks-make-positive-headlines-gold
4. **World Gold Council** — "Central banks set to step up gold buying over the next year" (June 16, 2026). https://www.gold.org/news-and-events/press-releases/central-banks-set-step-gold-buying-over-next-year
5. **FRED / St. Louis Fed** — Foreign Portfolio Holdings of US Treasury Securities: China, Mainland (FORTREASPOS41408). https://fred.stlouisfed.org/series/FORTREASPOS41408
