For the first time since 1996, central banks hold more gold than U.S. Treasuries in their reserves.
Visual Capitalist data shows gold reaching 24% of foreign central bank reserves in Q2 2025, surpassing U.S. debt holdings at 23%.
This reverses a 29-year pattern of dollar dominance in global reserves.
The Shift Accelerated Recently
2021: Gold 13%, U.S. debt 28%
2023: Gold 15%, U.S. debt 26%
2025: Gold 24%, U.S. debt 23%
China, India, and Turkey led gold accumulation… emerging markets specifically reducing dollar exposure.
Here are the key drivers why central banks are diversifying:
Soaring U.S. debt levels and geopolitical tensions drove the search for alternatives.
Gold offers durability, portability, and neutrality that no sovereign currency provides.
It hedges against currency volatility and inflation without counterparty risk.
When one country's fiscal policy or geopolitical decisions affect reserve value, central banks holding those assets absorb the impact.
Gold removes that dependency.
Central bank reserve composition reflects long-term confidence in asset stability.
For three decades, U.S. Treasuries dominated because they combined liquidity, safety, and return.
That calculation shifted when debt sustainability concerns and geopolitical tensions made diversification essential rather than optional.
This doesn't mean dollar collapse.
It means dollar dominance is declining as reserve managers build optionality.
Implications for International Business
Currency reserve diversification affects exchange rate stability, financing costs, and capital flow patterns.
Organizations with significant cross-border operations, dollar-denominated contracts, or emerging market exposure face different currency risk profiles
than existed even five years ago.
The global financial architecture is rebalancing.
Companies assuming permanent dollar dominance in contracts, pricing, and hedging strategies may face conditions those assumptions don't accommodate.
