Gold has officially surpassed the euro to become the world's second largest reserve asset by market value, after the US dollar, according to the European Central Bank (ECB) just released Annual Report.
This turning point marks a historic change in the global financial situation, in the context of escalating geopolitical tensions and global central banks accelerating gold accumulation as a protective shield.
According to the ECB, global central banks have purchased more than 1,000 tonnes of gold in 2024, double the annual average of the previous decade. Official global gold reserves have now reached 36,000 tonnes, approaching the peak seen in 1965 under the Bretton Woods system.
This huge volume of gold, along with skyrocketing gold prices, has put gold in the second largest global reserve asset by market price in 2024, behind only the USD, the ECB emphasized.
With a nearly 30% increase in 2024, gold prices have at times surpassed the record of 3,500 USD/ounce, pushing the proportion of gold in the global reserve portfolio to 20%, much higher than the euro at 16%.
The ECB said about 66% of central banks buy gold to diversify reserves; 40% buy out of concern for geopolitical risks.
The special thing is that most of the additional gold purchases come from emerging economies, many of which are not closely linked to the West, including members or partners of the BRICS group.
However, the ECB insists the euro's international role remains relatively stable in 2024, keeping it at around 20% if calculated at a fixed exchange rate. However, the shocking increase in gold prices has caused the common currency of Europe to lose its runner-up position in terms of market value in global reserves.
The ECB also warned of a series of new challenges for the euro such as the emergence of cryptocurrencies and stablecoin in cross-border payments. Countries are trying to avoid traditional payment systems due to the influence of the Ukrainian conflict, US-China tensions, instability in the Middle East and the "de-dollarization" trend of BRICS countries.
The report also pointed out that the share of the US dollar in global foreign exchange reserves has decreased slightly, to 57.8%. However, the greenback has maintained its absolute No. 1 position until now.
