Gold has carved out a new top spot in the hierarchy of official reserves, according to data from the European Central Bank. By the end of 2025, the precious metal accounted for 27% of global currency reserves, overtaking both US Treasuries (22%) and the euro (15%). The milestone, however, comes with a significant asterisk: most of that surge reflects a blistering price rally rather than fresh central bank hoarding. The ECB notes that gold’s nominal price jumped about 60% in 2025, following a 30% gain the year before. Stripping out that valuation effect puts gold’s reserve share at 16%, with US Treasuries still commanding 26%.
The bullion market itself is trading in a state of suspended animation. Gold settled Tuesday at $4,515.40 per fine ounce, up 1.53% over the past seven days but slightly in the red over 30 days. Technically, the metal sits above its 200-day moving average of $4,416 but below the 50-day line at $4,641—2.71% under that benchmark. The relative strength index at 49.8 points to neither overbought nor oversold territory. On a year-to-date basis, gold is up roughly 4%, yet that masks a 17% slide from the January high of $5,450.
Two countervailing forces are keeping the price anchored. Eurozone inflation unexpectedly accelerated to 3.2% in May from 3.0%, driven by a 10.9% year-on-year surge in energy costs. ECB board member Isabel Schnabel has already flagged the need for a rate hike at the June 11 meeting, and Commerzbank expects a 25-basis-point move. Higher rates normally weigh on non-yielding gold, but the persistent inflation simultaneously burnishes its store-of-value credentials. The contradictory dynamic is, for now, working in the metal’s favor.
Geopolitical upheaval provides the other pillar of support. The Strait of Hormuz remains closed as negotiations between the US and Iran appear to stall—Tehran’s state media reported the talks had ended, even as President Trump claimed progress toward a deal within a week. The blockade keeps energy prices elevated (Brent crude eased only slightly to $93.91) and reinforces gold’s safe-haven appeal. As long as that chokepoint stays shut, the premium for haven assets is likely to persist.
Should investors sell immediately? Or is it worth buying Gold?
Central banks continue to underpin physical demand, though with less frenzy than in prior years. The World Gold Council estimates net purchases of 243.7 tonnes in the first quarter of 2026—17% higher than the preceding quarter and 3% above the same period last year. Poland led reported buyers with 31 tonnes, followed by Uzbekistan at 25 tonnes, with additional purchases from China, Kazakhstan and the Czech Republic. On the sell-side, Turkey, Russia and Azerbaijan’s SOFAZ sovereign oil fund all reduced holdings. The data come with a caution: central banks often report transactions with a lag, so a portion remains estimated.
Full-year 2025 central bank buying came in at about 850 tonnes, the ECB notes, a clear deceleration from the 1,000+ tonnes annually recorded between 2022 and 2024. Even so, that pace remains historically elevated as monetary authorities diversify away from dollar and euro assets amid prolonged geopolitical tensions.
The shifting demand pattern is reshaping the supply side of the market. Total gold supply expanded 2% in the first quarter to 1,230.9 tonnes, with mine production also up 2%. Recycling activity jumped 5% as high prices tempted holders to cash in old jewelry. But the real divergence lies in end-use: jewelry fabrication plunged 23% to 335.0 tonnes, while investment in bars and coins soared 42% to 473.6 tonnes. Exchange-traded funds and similar products, by contrast, lagged year-ago levels. Physical investment and central bank accumulation now dominate the narrative, relegating ornamental demand to a secondary role.
The ECB’s reserve data crystallize that shift. Gold’s share of official reserves has climbed not just because of price, but because central banks increasingly view the metal as a hedge against geopolitical risk—a motive cited repeatedly in ECB surveys of reserve managers. The key question for the months ahead is whether net buying can sustain its momentum without the tailwind of further price gains. For now, the market awaits fresh catalysts: US jobs data due later this week could reset rate expectations, and any resolution—or escalation—in the Hormuz standoff would likely dictate the next decisive move.
Ad
Gold Stock: Buy or Sell?! New Gold Analysis from June 3 delivers the answer:
The latest Gold figures speak for themselves: Urgent action needed for Gold investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from June 3.
Gold: Buy or sell? Read more here...