Key facts
- Gold has surpassed U.S. government bonds as the world's top reserve asset.
- Gold accounts for 27% of global central bank reserves by the end of 2025.
- U.S. Treasuries account 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 around 370 million barrels.
- The House of Representatives voted to end the Iran war.
Gold has overtaken U.S. government bonds as the world's foremost reserve asset, holding 27% of global central bank reserves by the close of 2025, an increase from 20% the previous year. U.S. Treasuries have consequently fallen to 22% from 25%. This significant shift is attributed to escalating geopolitical tensions and the perceived weaponization of the U.S. dollar. Central banks demonstrated renewed interest in gold during April, acquiring 17 tons. This follows a substantial selloff of nearly 30 tons in March. Poland was the largest purchaser, adding 14 tons, with China also buying 8 tons, while Russia continued its net sales. The absence of Exchange Traded Fund (ETF) buying and rising Treasury yields present challenges to gold's momentum. Gold prices have seen an increase of $45, correlating with a decline in U.S. Treasury yields, a typical inverse relationship where lower yields enhance the attractiveness of non-yielding assets like gold. The U.S. Dollar is identified as the primary influence on gold prices (XAUUSD).
In parallel, U.S. crude oil inventories experienced a significant decline of 6.75 million barrels in the week concluding May 29, following a 2.8 million barrel decrease in the preceding week. Despite these recent drops, crude inventories have risen by 16 million barrels year-to-date. The U.S. Strategic Petroleum Reserve (SPR) is approaching its lowest level since 1983, with current holdings hovering around 370 million barrels. This depletion of oil reserves coincides with a House of Representatives vote to end the Iran war, a development described as a significant political setback. In a separate energy-related event, the Trump administration's auction of drilling rights in Alaska's Arctic National Wildlife Refuge saw limited participation from major oil firms, suggesting concerns regarding commercial viability and associated risks.
The shift in central bank reserve preferences reflects broader anxieties about global stability and the role of the U.S. dollar in international finance. The "weaponization of the dollar" refers to the use of financial sanctions and other economic tools by the U.S. government to exert influence or punish other nations, leading some countries to diversify their reserves away from U.S. assets. The decline in U.S. oil reserves, particularly the SPR, raises questions about energy security and the nation's ability to respond to supply disruptions. The lack of interest in Arctic drilling rights auction highlights the complex interplay of market economics, environmental concerns, and political risk in the energy sector.