Gold Surpasses U.S. Treasuries in Central Banks’ Reserves for the First Time Since 1996: What It Means for the Global Economy
Table of Contents
- Introduction
- The Historic Shift: Gold Overtakes U.S. Treasuries
- Data at a Glance: Central Banks’ Changing Portfolios
- Why Central Banks Are Turning to Gold
- 4.1 Sanctions-Proof Asset
- 4.2 U.S. Debt Concerns
- 4.3 Diversification Benefits
- The Numbers Behind the Trend
- India’s Growing Gold Reserves: A Case Study
- The Role of the Dollar: Still the Global Backbone
- Implications for Global Financial Stability
- Potential Risks of Heavy Gold Dependence
- Analysts’ Perspectives and Forecasts
- Insights: A Recalibration, Not a Revolution
- Conclusion
- FAQs
Introduction
Central banks have crossed a historic threshold: for the first time since 1996 they collectively hold more gold than U.S. Treasuries. This is more than a headline—it signals a careful rebalancing of global reserve strategy. The World Gold Council estimates that as of May 2025 official gold holdings are about 36,344 tonnes, with market value above $3.6 trillion as bullion trades near $3,500 per ounce. Set against the U.S. Treasury Department’s June 2024 tally of foreign Treasury holdings, the center of gravity has nudged toward bullion, reflecting fresh concerns over sanctions risk, swelling U.S. debt, and the danger of leaning on a single currency system.
Importantly, this is not the end of dollar dominance; it is diversification in action. Reserve managers from Beijing to Brasília are adding gold as geopolitical insurance, inflation protection, and portfolio ballast. The dollar still anchors trade and finance, yet central banks are hedging to build resilience against policy shocks and market volatility. For policymakers, the message is clear: credibility and fiscal discipline matter. For investors and households, the takeaway is balance—gold can stabilize portfolios, but it yields nothing and can be volatile. Understanding this shift will shape decisions through 2025 and beyond, in coming years.
The Historic Shift: Gold Overtakes U.S. Treasuries
For decades, U.S. Treasuries have been the gold standard of safety—liquid, reliable, and backed by the full faith of the U.S. government. Since the end of the Cold War, central banks treated them as the ultimate reserve asset, ensuring stability during global shocks.
But 2025 marks a turning point. For the first time in nearly three decades, central banks now collectively hold more gold than U.S. Treasuries. This shift is not a sudden break but the result of years of quiet rebalancing. According to Crescat Capital strategist Tavi Costa, it represents “one of the most significant global rebalancings in recent history.”
The seeds were planted in 2022, when sanctions on Russia froze hundreds of billions of its dollar and euro reserves. That moment exposed the vulnerabilities of relying too heavily on U.S. debt and dollar-centric systems. Gold, by contrast, cannot be sanctioned, blocked, or defaulted upon.
Today, bullion is more than just a hedge against inflation—it has become a geopolitical insurance policy. Central banks from China to India to Turkey are boosting gold reserves, signaling a broader push for diversification. While the U.S. dollar remains dominant, this historic gold surge highlights a new multipolar financial era.
Data at a Glance: Central Banks’ Changing Portfolios
The balance of global reserves is shifting in ways not seen for nearly three decades. Central banks, once heavily reliant on U.S. Treasuries, are now building record gold positions. The numbers reveal a clear story: a steady move toward diversification, security, and risk management.
📊 Key Highlights from 2025
- Global official gold holdings now stand at 36,344 tonnes (World Gold Council, 2025).
- The market value of these reserves exceeds $3.6 trillion (ECB, 2025), thanks to gold prices reaching historic highs.
- By contrast, foreign holdings of U.S. Treasuries are about $3.8 trillion (U.S. Treasury, June 2024). While still slightly larger in absolute value, the gap has narrowed dramatically.
- Annual central bank gold purchases have accelerated:
- 2022: 1,082 tonnes
- 2023: 1,037 tonnes
- 2024: 1,180 tonnes (all-time record)
- 2025 (Q1 + Q2): 410 tonnes, on track for ~1,000 tonnes by year-end.
📌 Why This Matters
-
Gold’s Rising Share
Gold now accounts for 20% of global reserves, surpassing the euro at 16%. While the U.S. dollar remains dominant at 46%, this milestone signals a meaningful recalibration of global reserve strategies. -
A Multi-Year Trend
The momentum isn’t accidental. Since 2022, after sanctions on Russia froze hundreds of billions in foreign reserves, central banks have treated gold as a geopolitical safe haven. The metal’s appeal lies in the fact it cannot be sanctioned, frozen, or defaulted on. -
Diversification Beyond the Dollar
Treasuries remain attractive for liquidity and yield, but the pace of U.S. borrowing and rising debt—over $34 trillion in 2024—has pushed some nations to balance their exposure. Gold offers stability, especially for emerging markets like China, India, and Turkey that are leading the purchases. -
Market Impact
With central banks competing alongside investors and jewelers, gold prices have surged above $3,500 per ounce in 2025. This institutional demand creates both opportunities for long-term holders and challenges for retail buyers facing higher costs.
🌍 The Bigger Picture
The numbers show a decisive shift: gold is no longer a forgotten relic but a core reserve asset. While the dollar is far from dethroned, central banks are actively reshaping portfolios for resilience in an uncertain world.
4.Why Central Banks Are Turning to Gold
Central banks across the globe are steadily increasing their gold reserves, marking one of the most significant shifts in international finance in decades. This move is not accidental—it’s a strategic recalibration driven by three powerful forces: the search for sanctions-proof assets, worries about U.S. debt sustainability, and the need for diversification in reserve management.
4.1 Sanctions-Proof Asset
The Russia–Ukraine conflict in 2022 highlighted just how vulnerable traditional reserves can be. When the U.S. and its allies froze about $300 billion of Russia’s foreign exchange reserves, it sent shockwaves through other countries. Suddenly, holding reserves in dollars or euros came with a hidden risk: political exposure.
Gold, however, stands apart. Unlike digital reserves or bonds, it cannot be easily blocked or frozen. This makes bullion the ultimate geopolitical insurance policy. Nations facing potential sanctions—such as China, Iran, or Turkey—are especially motivated to stockpile gold. For them, it’s not just an asset; it’s a shield against external pressures.
4.2 U.S. Debt Concerns
Another driver is growing concern over the long-term stability of U.S. debt. As of 2024, America’s national debt has surged past $34 trillion, raising alarms about the future value of U.S. Treasuries. Agencies like Fitch have already downgraded U.S. credit ratings, citing unsustainable borrowing levels.
For central banks, this presents a dilemma: while Treasuries remain liquid and widely accepted, their reliability as a “risk-free” asset is no longer beyond question. By turning to gold, central banks are hedging against the possibility that U.S. fiscal issues could erode trust in dollar-backed securities.
4.3 Diversification Benefits
Finally, there is the question of balance. The U.S. dollar still dominates global reserves, accounting for more than half of total holdings. But over-reliance on one currency exposes economies to exchange rate fluctuations, inflation, and financial shocks.
Gold offers a natural hedge. It is universally accepted, historically stable, and moves differently from traditional financial assets. By increasing gold allocations, central banks aim to create resilience in their portfolios. This diversification strategy reduces dependence on the dollar while strengthening financial security.
Central banks’ pivot toward gold is more than a short-term trend—it’s a strategic response to today’s uncertain global order. With sanctions risks rising, U.S. debt climbing, and diversification becoming essential, gold has reclaimed its place as a cornerstone of financial security and economic independence.
The Numbers Behind the Trend
The shift toward gold is not just a headline—it’s backed by hard numbers and a clear change in central bank strategy. According to the World Gold Council’s 2025 survey, global reserve managers are signaling a long-term structural pivot in how they protect national wealth.
Key Findings from the 2025 Survey
- 43% of central bankers plan to increase gold reserves within the next 12 months.
- 95% believe that global gold holdings will continue to rise.
- Emerging markets—especially China, India, and Turkey—are leading the buying spree.
This data reflects a complete turnaround from the 1990s and early 2000s, when central banks were actually net sellers of gold, reducing their bullion stocks in favor of U.S. Treasuries and foreign exchange.
Why the Numbers Matter
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A Structural Shift in Reserves
For decades, U.S. Treasuries were considered the safest asset. But with debt levels climbing and geopolitical tensions rising, many central banks are choosing gold as a hedge against uncertainty. -
Emerging Markets in the Spotlight
Countries like China and India are aggressively boosting their gold positions. China sees gold as a way to diversify away from the U.S. dollar, while India is bolstering confidence in the rupee amid global volatility. Turkey, facing its own currency instability, has also turned to gold as a shield. -
Confidence in Long-Term Value
The overwhelming 95% consensus among central bankers that gold reserves will keep rising signals trust in bullion as a stable store of value. This sentiment has helped push prices to record highs, above $3,500 per ounce in 2025. -
A Break from the Past
In the late 20th century, gold was often viewed as outdated, with many central banks reducing holdings to invest in interest-bearing securities. Today, the story has flipped—gold is no longer the “old-world asset” but rather a modern shield against sanctions, debt risks, and inflation.
The numbers behind this trend show more than just market speculation—they reflect a seismic rebalancing of global reserves. With nearly half of central banks planning to buy more gold and almost all expecting holdings to rise, the future of reserve management looks increasingly tied to bullion.
For investors and policymakers alike, these figures underscore a crucial reality: gold has re-emerged as a core pillar of financial security in the 21st century.
India’s Growing Gold Reserves: A Case Study
India has always shared a deep connection with gold—culturally, economically, and strategically. But in recent years, this connection has taken on a new dimension at the policy level. The Reserve Bank of India (RBI) has steadily expanded its gold holdings, reaching an estimated 880 tonnes by March 2025. This makes gold about 12% of India’s total foreign exchange reserves, a noticeable increase compared to past decades.
So, what does this shift mean for India, and why is the RBI betting big on bullion?
Why India Is Increasing Its Gold Reserves
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Boosting Rupee Confidence
A stronger gold base enhances global confidence in the rupee, signaling that India has hard assets to back its currency in times of uncertainty. -
Shielding Against Global Shocks
With the world facing rising debt levels, inflation, and geopolitical conflicts, gold acts as a safe-haven buffer for India’s financial system. -
Joining the Asia-led Gold Rush
India’s purchases are part of a broader Asia-driven movement, with China and Turkey also leading global central bank demand. Together, these countries are redefining how reserves are managed beyond the dollar.
Impact on Domestic Gold Consumers
While the RBI’s strategy strengthens the nation’s balance sheet, there are trade-offs for Indian households. As global central bank buying pushes prices higher, Indian consumers—traditionally the world’s largest buyers of jewelry and bullion—are feeling the pinch.
In October 2025, MCX gold futures crossed ₹1,05,937 per 10 grams, a record high. Weddings, festivals, and cultural traditions that rely heavily on gold purchases are now costlier, straining middle-class families and jewellers alike. Demand patterns are shifting, with more households turning to lighter jewelry or digital gold investments instead of traditional large purchases.
Strategic Takeaways
- National Resilience: Gold strengthens India’s ability to withstand global financial shocks.
- Geopolitical Hedge: In a world of sanctions and debt crises, gold is a sanctions-proof reserve.
- Domestic Dilemma: High prices benefit the RBI’s balance sheet but squeeze ordinary Indians.
India’s rising gold reserves highlight a balancing act between macro stability and domestic affordability. By increasing its bullion holdings, the RBI signals confidence, resilience, and alignment with global trends in reserve diversification. Yet, this shift also reshapes how ordinary Indians interact with gold—a metal that is not just a reserve asset but also a cultural cornerstone.
The Role of the Dollar: Still the Global Backbone
Even though gold has just overtaken U.S. Treasuries in central banks’ reserves, the U.S. dollar remains the world’s dominant reserve currency. This distinction matters. While gold provides safety, the dollar still powers the arteries of global trade, finance, and investment.
Why the Dollar Still Leads
- Liquidity & Trust: Around 58% of all global forex reserves are still held in dollars (IMF COFER, 2024). No other currency comes close in terms of liquidity and universal acceptance.
- Trade Invoicing: Most international trade—from oil to technology—is still priced in dollars. Even countries diversifying into gold rely on dollars for daily settlement.
- Financial Market Depth: U.S. capital markets remain the deepest and most accessible in the world, making dollar assets critical for central banks and investors.
- Stability & Safe Haven Role: In times of crisis, global investors rush toward dollars, not away from them. Gold may hedge risk, but the dollar provides the foundation for emergency liquidity.
The Euro and Gold Challenge—But Don’t Replace
The European Central Bank (ECB), when including gold as a reserve asset, calculates the dollar’s share closer to 46%. That shows diversification is real. Gold’s rising role and the euro’s position (around 16%) demonstrate that the dollar’s dominance is gradually being balanced—but not dismantled.
Dollar vs. Gold: Different Purposes
- Dollar = Functionality → trade, liquidity, financing.
- Gold = Insurance → hedge against sanctions, debt risks, and inflation.
Central banks are not choosing one over the other. Instead, they are building multi-layered reserves—with the dollar at the core and gold as a shield.
Why “End of the Dollar” Narratives Are Overblown
Some headlines frame gold’s surge as a signal of the dollar’s decline. In reality:
- The dollar still accounts for over half of reserves.
- Global debt markets and SWIFT payment systems are dollar-centric.
- Even BRICS nations pushing for alternatives still rely on the dollar for trade settlements.
Gold overtaking Treasuries is historic, but it does not dethrone the dollar. Instead, it marks a recalibration: central banks are diversifying, hedging risks, and preparing for volatility. Yet, the U.S. dollar remains the global backbone—the anchor of world reserves, trade, and finance.
For the foreseeable future, any discussion of global monetary power must start—and end—with the dollar.
Implications for Global Financial Stability
The fact that central banks now hold more gold than U.S. Treasuries for the first time since 1996 carries profound consequences for the global financial system. While the U.S. dollar remains the world’s primary reserve currency, this shift highlights new pressures that could reshape markets, debt dynamics, and geopolitical strategies. Let’s break down the key implications.
1. De-dollarization Momentum
One of the biggest takeaways is the growing momentum behind de-dollarization. BRICS nations—Brazil, Russia, India, China, and South Africa—have long expressed concerns about overreliance on the U.S. dollar. By increasing their gold reserves, these countries are signaling a clear intent to build a more diversified and resilient financial safety net. While the dollar is unlikely to lose its dominance overnight, the symbolic weight of this milestone adds credibility to discussions about a multipolar currency order.
2. Market Volatility
Another consequence is heightened gold market volatility. Central banks have been buying record amounts of bullion, pushing gold above $3,500 per ounce. This sustained demand creates upward pressure on prices, but it also makes the market more sensitive to shifts in policy. If central banks slow down purchases, corrections could be sharp and sudden. For retail investors and industries that depend on gold—such as electronics and jewelry—this means navigating a more unpredictable landscape.
3. Debt Financing Challenges for the U.S.
A reduced appetite for U.S. Treasuries poses real challenges for Washington. For decades, Treasuries have been the go-to safe asset for global central banks, allowing the U.S. to finance deficits at relatively low cost. If foreign demand continues to decline in favor of gold, the U.S. may face higher borrowing costs, complicating fiscal management. In the long run, this could pressure the U.S. government to either curb spending or accept a heavier debt burden—both politically sensitive choices.
4. Resilience Against Sanctions
Finally, gold accumulation strengthens resilience against sanctions. When the West froze $300 billion of Russia’s reserves in 2022, it exposed the vulnerability of holding assets in dollars or euros. By shifting into gold, countries like Russia, China, and Iran are insulating themselves from potential financial weaponization. This trend could limit the effectiveness of sanctions as a geopolitical tool, altering the balance of power in international relations.
The surge in gold reserves signals a recalibration of global finance. It doesn’t end the dollar era, but it creates new dynamics—more volatility, higher U.S. debt costs, and a multipolar reserve system where gold plays a bigger role than at any time in recent history.
Potential Risks of Heavy Gold Dependence
While the surge in central bank gold reserves signals confidence in bullion as a hedge against uncertainty, relying too heavily on gold comes with its own set of risks. Unlike U.S. Treasuries or other financial instruments, gold has unique limitations that could challenge central banks, policymakers, and even investors. Let’s break down the key concerns:
1. Price Volatility
Gold is often seen as a safe haven, but it is not immune to sharp swings in price. Over the past decade, bullion has experienced rapid rallies followed by steep corrections. For example, during times of geopolitical tension, prices may spike, only to cool off once markets stabilize. Central banks holding a large share of reserves in gold could face sudden valuation drops. This volatility creates planning challenges, especially for economies that need predictable reserve values to support currency stability.
2. Storage & Security Costs
Unlike digital assets such as U.S. Treasuries or euros in central bank accounts, gold is a physical asset that must be securely stored. Vaulting, insurance, and transportation costs can be substantial, particularly for countries that accumulate thousands of tonnes. For smaller economies, these costs eat into the potential benefits of gold as a “risk-free” asset. Maintaining global-standard security also requires constant investment in infrastructure and logistics, making gold more expensive to hold compared to paper assets.
3. Lack of Yield
One of the biggest drawbacks of gold is that it does not generate interest or dividends. U.S. Treasuries, by contrast, pay out regular yields, helping central banks manage reserves while earning returns. In periods of economic calm and low inflation, the opportunity cost of holding gold becomes more apparent. Reserves locked in bullion do not produce income, which can put pressure on fiscal policies and reduce flexibility for countries that rely heavily on reserve returns.
4. Liquidity Risks
Selling Treasuries is fast and straightforward due to deep global markets. Gold, however, presents liquidity challenges. Offloading large amounts in a short time can disrupt markets, push prices downward, or attract speculation. This makes it harder for central banks to quickly mobilize reserves during crises compared to liquid instruments like Treasuries or major currencies.
Gold is a powerful insurance policy against uncertainty, but overdependence introduces trade-offs. A balanced reserve strategy—mixing gold with liquid, yield-generating assets—ensures both security and stability in a volatile global financial system.
Analysts’ Perspectives and Forecasts
The historic moment of gold surpassing U.S. Treasuries in central banks’ reserves has sparked intense debate among economists and market watchers. While there is consensus that gold is gaining importance, experts differ on how far this trend could reshape the global financial system. Here’s a closer look at what leading institutions and analysts are saying.
1. World Gold Council: Sustained Demand Ahead
The World Gold Council (WGC) expects central banks to purchase around 1,000 tonnes of gold in 2025, following record-breaking acquisitions in recent years. This would mark the fourth consecutive year of massive buying. Looking further ahead, the WGC forecasts continued growth through 2030, led by emerging economies such as China, India, and Turkey.
- Why it matters: Sustained demand indicates that central banks view gold not as a temporary hedge but as a long-term strategic asset.
2. IMF: A Gradual Shift, Not a Revolution
The International Monetary Fund (IMF) cautions that while gold is rising in importance, de-dollarization remains gradual and partial. The U.S. dollar still dominates global trade and finance, accounting for over half of official reserves.
- Key takeaway: Gold’s rise does not mean the end of dollar dominance. Instead, it reflects diversification, where gold plays a complementary role rather than a replacement.
3. Bloomberg Economics: Bullish Price Forecasts
According to Bloomberg Economics, if current central bank buying trends continue, gold could reach $4,000 per ounce by 2026. This forecast builds on strong momentum, with bullion already trading above $3,500 in 2025.
- Investor insight: Rising central bank demand provides a powerful floor under gold prices, creating opportunities for long-term investors, though short-term volatility may persist.
4. BIS: Warning of Systemic Risks
The Bank for International Settlements (BIS) takes a more cautious view, warning that overreliance on gold could create systemic risks. If central banks continue to load up heavily on bullion and prices correct sharply, it could destabilize balance sheets and shake confidence in reserves.
- Risk factor: Gold has no yield, and sudden price swings could expose vulnerabilities in financial systems.
Analysts agree that gold’s role in central bank reserves is expanding, but opinions diverge on the implications. For some, it’s a bullish long-term story; for others, a reminder that diversification carries its own risks. What’s clear is that gold is back at the center of global reserve strategy—and it’s reshaping financial debates worldwide.
Insights: A Recalibration, Not a Revolution
When news broke that central banks now hold more gold than U.S. Treasuries for the first time since 1996, it made global headlines. Some rushed to call it the end of the dollar era. But the truth is more balanced—and more interesting. This is not a revolution. It is a recalibration of the global reserve system.
1. The Dollar Still Dominates
Despite the historic gold milestone, the U.S. dollar remains the backbone of global finance. Roughly 58% of global foreign exchange reserves are still held in dollars. The greenback’s unmatched liquidity, deep bond markets, and central role in global trade mean it isn’t going anywhere soon. Oil, commodities, and most international trade contracts are still priced in dollars, making it indispensable for governments and corporations.
2. Gold’s Growing Role in Reserves
Gold’s appeal is different. Unlike Treasuries, gold is a sanctions-proof asset—no foreign government can freeze it. It also protects against inflation and currency depreciation. Central banks are not abandoning the dollar but are balancing it with gold as a form of financial insurance. This diversification makes sense in an era of rising geopolitical risks and ballooning U.S. debt.
3. A Multipolar Reserve System
The world is slowly moving toward a multipolar system, where reserves are spread across different assets instead of concentrated in a single currency.
- Dollar = liquidity and trade integration
- Gold = security and independence
- Euro, yuan, and others = regional alternatives
This does not mean the U.S. dollar is collapsing, but it does suggest the world is less comfortable relying on just one pillar.
4. Why This Matters for the Global Economy
- Resilience: A diversified reserve system makes countries less vulnerable to financial shocks or sanctions.
- Market impact: Strong central bank gold buying supports higher bullion prices, which also influences consumer costs for jewelry and imports.
- Debt challenge for the U.S.: Lower demand for Treasuries could mean higher borrowing costs in the long run.
Final Takeaway
The shift from Treasuries to gold is symbolic of a new balance in global finance. It reflects caution—not collapse. Policymakers, investors, and citizens should see this as part of a broader transition toward a fragmented but resilient financial order.
Gold’s rise is real, but the dollar’s dominance remains. Together, they now form the dual anchors of a more balanced reserve strategy.
Conclusion
Gold surpassing U.S. Treasuries in central banks’ reserves for the first time since 1996 is a powerful signal. It underscores a loss of absolute trust in U.S. debt, a rise in geopolitical risk awareness, and a structural recalibration of global reserves.
Yet, this is not the end of the dollar era. Instead, it is the dawn of a more balanced system, where gold plays a stronger role alongside fiat currencies. For policymakers, it means designing resilient strategies. For investors, it offers both opportunities and risks in a volatile market.
The shift is historic—but it is not final. The global reserve landscape will continue to evolve with geopolitics, fiscal policies, and market shocks.
FAQs
1. Why have central banks increased gold purchases since 2022?
Because of sanctions risks, rising U.S. debt, and the desire for diversification. The freezing of Russia’s reserves was a major catalyst.
2. Does this mean the U.S. dollar is losing its status as the world’s reserve currency?
Not immediately. The dollar still accounts for over half of global reserves. Gold’s rise reflects diversification, not replacement.
3. Which countries are leading the gold-buying trend?
China, India, Turkey, and Russia are among the largest buyers.
4. How does this affect ordinary investors?
Rising central bank demand supports higher gold prices, which can benefit gold investors but make jewelry and imports more expensive.
5. Could gold prices fall if central banks slow purchases?
Yes. While long-term demand looks strong, any pause could trigger corrections.
6. How much gold does India hold now?
Around 880 tonnes (RBI, March 2025), about 12% of its forex reserves.
visuals (charts/graphs) to clearify—for example:
- Gold vs U.S. Treasuries in reserves (1996–2025)
- Central bank gold purchases year by year
- Currency composition of global reserves (Dollar, Euro, Gold, Others)?
Sources -
Bank for International Settlements. Annual Economic Report 2025. BIS, 2025.
Bloomberg Economics. “Gold Could Reach $4,000 an Ounce by 2026 as Central Bank Buying Surges.” Bloomberg, 2025.
Congressional Budget Office. The Budget and Economic Outlook: 2024 to 2034. U.S. CBO, 2024.
Costa, Tavi. Comment on global reserves shift. Crescat Capital, 2025.
European Central Bank. Statistical Data Warehouse: International Reserves. ECB, 2025.
Fitch Ratings. “Fitch Downgrades U.S. Long-Term Ratings on Fiscal Instability Concerns.” Fitch Ratings, 2023.
International Monetary Fund. Currency Composition of Official Foreign Exchange Reserves (COFER). IMF, 2024.
Multi Commodity Exchange of India. “Gold Futures Pricing Data.” MCX, Oct. 2025.
Reserve Bank of India. Annual Report 2024–25. RBI, Mar. 2025.
U.S. Department of the Treasury. Major Foreign Holders of Treasury Securities, June 2024. U.S. Treasury, 2024.
World Gold Council. Gold Demand Trends Q2 2025. WGC, 2025.
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