The world markets have now started to show a stark pivot towards gold, with the yellow metal ending up outpacing competitors like the euro in the process. Gold has now emerged as the second most held reserve in the world, dethroning the euro, all while displaying its robust performance and hedge quality profits over the years. Will the markets continue to favor gold over any other asset? How long will this gold rally last? Will there be another gold competitor in the market? Let’s seek answers to solve such burning queries.
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Gold Beats Euro
A new report by the European Central Bank has crowned gold as the 2nd breakout asset after the US dollar. Gold has now emerged as the second most held reserve asset in central banks as global economies encounter rising chaos spurred by the ongoing war crisis. The tumultuous war narratives have pushed the investors to consider gold as the best hedge asset, with world markets and economies continuing to bulk on gold to balance their profit margins.
The report details stark new information, adding how the US dollar is still leading the pack, making up 46% of the total world reserves. Gold at the moment constitutes 20% of global reserves, beating the euro, which currently stands at a modest 16%.
The stark war crisis, coupled with fierce Trump policies, has led the world to depend more on gold rather than any other asset. The yellow metal has always been considered the best-performing hedge asset during rising economic uncertainty, compelling banks to stock up on the yellow metal from 2022 all the way to 2025.
“Investors are piling into gold funds like never before. Gold funds have posted a record $85 BILLION in net inflows year-to-date. This is more than DOUBLE the full-year record seen in 2020. At this pace, net inflows will surpass $180 billion by the end of 2025. Gold is now the best-performing major asset class, up 22% year-to-date. Since the low in October 2022, gold prices have gained 97%. Gold is the global hedge against uncertainty.”
Investors are piling into gold funds like never before:
— The Kobeissi Letter (@KobeissiLetter) May 19, 2025
Gold funds have posted a record $85 BILLION in net inflows year-to-date.
This is more than DOUBLE the full-year record seen in 2020.
At this pace, net inflows will surpass $180 billion by the end of 2025.
Gold is now the… pic.twitter.com/Lno4Axk5iV
Central Banks’ Precious Metal Buying Spree: Interesting Stats
Per the latest ECB report, central banks around the world have been busy rigorously purchasing gold. For instance, from 2022 to 2024, central banks have added 1000 tonnes worth of gold every year, creating a hedge against violent economic fluctuations and uncertainties.
Global official AUX holdings are currently sitting at 36000 tonnes, with the US Federal Reserve alone holding nearly 8316 tonnes of the yellow metal.
“World central banks expect gold reserves to continue rising. 95% of central banks anticipate global gold reserves to rise over the next year, according to a World Gold Council survey. A record 43% of those surveyed plan to boost their holdings during this time.Furthermore, 76% of respondents believe that gold will hold a larger share of global reserves over the next 5 years. At the same time, 73% foresee US dollar holdings declining. Responses were fairly consistent between central banks in advanced, emerging markets and developing economies. Gold is on fire.”
World central banks expect gold reserves to continue rising:
— The Kobeissi Letter (@KobeissiLetter) June 21, 2025
95% of central banks anticipate global gold reserves to rise over the next year, according to a World Gold Council survey.
A record 43% of those surveyed plan to boost their own holdings during this time.… pic.twitter.com/sv2Kboyl6x
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