Gold surpasses euro as second-largest global reserve asset

The euro has recently lost its prominent position as the second-largest reserve asset globally, with gold now taking its place. This shift is significant as gold now comprises 20% of global reserves, steadily narrowing the gap with the U.S. dollar, which remains the leading reserve currency at 46%. The changing landscape of international finance, characterized by concerns over economic sanctions and the potential weaponization of reserve currencies, has led many nations to turn to gold. Historically viewed as a neutral and stable store of value, gold serves as a reliable safeguard against various economic uncertainties, including inflation and political instability.

This trend has been particularly pronounced among countries geopolitically aligned with, or located near, China and Russia. Starting from late 2021, several of these nations have ramped up their gold reserves as part of a broader strategy to enhance their financial autonomy. According to recent data from the World Gold Council, leading the charge in gold purchases are Türkiye, India, China, and Poland. Collectively, these nations have added more than 600 tons of gold to their reserves since the end of 2021, indicating a robust commitment to strengthening their financial positions.

It is noteworthy that India, which recently ascended to the status of the world’s fourth-largest economy, plays a pivotal role in this gold-buying surge. Meanwhile, Poland stands out as its European counterpart—uniquely positioned as the only regional outperformer projected for 2024. This dynamic not only underscores the shifting priorities of nations in an increasingly multipolar world but also highlights the evolving role of gold in the global economy as nations look to mitigate risks associated with traditional reserve currencies.

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