Key facts
- Gold has surpassed U.S. government bonds as the world's top reserve asset.
- Gold accounted for 27% of global central bank reserves by the end of 2025.
- U.S. Treasuries accounted for 22% of global central bank reserves by the end of 2025.
- Central banks bought 17 tons of gold in April.
- Central banks sold nearly 30 tons of gold in March.
- Poland purchased 14 tons of gold in April.
- China purchased 8 tons of gold in April.
- U.S. crude oil inventories fell by 6.75 million barrels in the week ending May 29.
- U.S. crude oil inventories have risen by 16 million barrels year-to-date.
- The U.S. Strategic Petroleum Reserve is nearing its lowest level since 1983.
- The U.S. Strategic Petroleum Reserve holds approximately 370 million barrels.
- The House of Representatives voted to end the Iran war.
Gold has surpassed U.S. government bonds to become the world's primary reserve asset, holding 27% of global central bank reserves by the close of 2025, an increase from 20% a year earlier. U.S. Treasuries have seen their share fall to 22% from 25%. This significant reallocation is attributed to escalating geopolitical tensions and the increasing 'weaponization' of the U.S. dollar. Central banks demonstrated this trend by purchasing 17 tons of gold in April, recovering from a nearly 30-ton selloff in March. Poland was a leading buyer, acquiring 14 tons, with China adding 8 tons, while Russia continued its net sales. The demand for gold is further supported by a recent $45 rise in gold prices, which coincided with a fall in U.S. Treasury yields, making non-yielding assets like gold more attractive. The U.S. Dollar is identified as the primary driver for gold prices (XAUUSD).
In the energy sector, U.S. crude oil inventories experienced a sharp decline of 6.75 million barrels in the week ending May 29, following a decrease of 2.8 million barrels in the preceding week. Despite these recent draws, crude inventories have seen a net increase of 16 million barrels year-to-date. The U.S. Strategic Petroleum Reserve (SPR) is now nearing its lowest level since 1983, with current holdings approximately at 370 million barrels. This depletion of oil reserves occurs alongside a House of Representatives vote to end the Iran war, a development described as a significant political setback. Meanwhile, the Trump administration's auction of drilling rights in Alaska's Arctic National Wildlife Refuge saw minimal participation from major oil firms, signaling concerns regarding commercial viability and associated risks.
The shift in central bank reserve allocation reflects a broader unease with traditional safe-haven assets and the geopolitical landscape. The U.S. dollar's role as a dominant reserve currency is being challenged by its perceived susceptibility to political influence, prompting diversification into tangible assets like gold. The falling U.S. Treasury yields, while currently making gold more attractive, also signal underlying economic conditions or policy shifts that influence investor behavior. The low levels in the U.S. Strategic Petroleum Reserve could also indicate a strategic decision or a response to market conditions, potentially impacting energy security perceptions.
Future trends in gold reserves will likely depend on the persistence of geopolitical instability and the U.S. dollar's trajectory. The SPR's low levels may prompt policy discussions regarding energy security and reserve management. The lack of interest in Arctic drilling rights auction suggests a continued caution in the oil exploration sector regarding high-risk, potentially low-return ventures.