On the evening of June 11, 2025, Beijing time, as the latest inflation data from the United States was released, the global financial market reacted quickly - the US dollar index (DXY) fell sharply, and the prices of gold and crude oil rose accordingly. Data showed that the US dollar index was 98.87, down 0.23% in a single day; the New York gold main contract was quoted at US$3,361.6/ounce, up 0.54%; Brent crude oil continued to rise to US$68.01/barrel, up 1.7%.

Behind this round of market conditions, the US CPI data in May was lower than market expectations, which pushed the market's expectations that the Federal Reserve would start cutting interest rates in September to rise rapidly. Data showed that the overall CPI in the United States rose 0.1% month-on-month in May, and the core CPI also recorded 0.1%, both lower than the general market forecast. Traders are betting that the Federal Reserve may cut interest rates twice this year.

However, another asset that is more closely related to the Federal Reserve's (Fed) monetary policy - gold, is quietly rewriting the global financial landscape.

ECB report: Gold surpasses the euro and becomes the world's second largest reserve asset.

On the same day, the ECB released its annual "International Status of the Euro" report, revealing a major change: the share of gold in foreign exchange reserves of various countries has jumped to 20%, surpassing the euro for the first time and becoming the second largest reserve asset of the world's central banks, second only to the US dollar.

The report shows that as of 2024, the US dollar will account for 46% of global foreign exchange reserves, slightly lower than the previous year; the euro remains unchanged at 19%. The share of gold has increased significantly, thanks to the continued rise in gold prices and large-scale purchases by central banks around the world.

In 2023, the price of gold rose by more than 30%, and continued to rise in 2024. So far, the year-to-date increase has reached 27%, and once hit a historical high of $3,500 per ounce. The continued surge in gold prices has made it increasingly attractive in the allocation of foreign exchange reserves of various countries.

The ECB pointed out that central banks are increasing their gold holdings at an unprecedented rate-the total amount of gold purchased in 2024 has exceeded 1,000 tons, equivalent to twice the annual average level in the 2010s. The total amount of gold held by central banks around the world is also approaching the peak of the Bretton Woods system in the 1960s. It has now reached 36,000 tons, just one step away from the peak of 38,000 tons that year.

The trend of "de-dollarization" drives gold to strengthen. Behind the central bank's increase in gold holdings, it reflects that the trend of "de-dollarization" and diversified allocation in the global reserve system is accelerating. The European Central Bank pointed out in the report that due to the need to avoid geopolitical risks and financial sanctions mechanisms, the central bank is more inclined to increase its holdings of "non-credit" assets such as gold to improve the shock resistance of the reserve structure.

This trend is also reflected in China's reserve strategy.

According to the latest data released by the People's Bank of China and the State Administration of Foreign Exchange in June, as of the end of May 2025, China's gold reserves reached 73.83 million ounces, an increase of 60,000 ounces from the previous month, achieving the seventh consecutive month of growth. During the same period, the total scale of China's foreign exchange reserves was US$3285.3 billion, a month-on-month increase of US$3.6 billion.

Wang Qing, chief macro analyst at Orient Securities, pointed out that although the global trade environment has eased partially and risk aversion has weakened in May, and the gold price has adjusted in the short term, the People's Bank of China continues to increase its holdings of gold, indicating that it attaches more importance to its medium- and long-term strategic value.

Wang Qing analyzed that the current proportion of gold in China's official foreign exchange reserves is only 7%, far below the global average of about 15%, which means that there is still room to increase the proportion of gold. From the perspective of safeguarding the credit of sovereign currencies, responding to potential external shocks, and promoting the internationalization of the RMB, gold is playing an increasingly critical strategic role.

The strong return of gold is not only a reflection of its excellent price performance, but also reveals that the global monetary system is undergoing subtle changes. In an era of complex geopolitics and the gradual re-examination of the credit of the US dollar, the status of gold as the "ultimate means of payment" has once again been valued by central banks of various countries.

When global central banks once again focus on this type of "hard currency" assets, the financial strategic role of gold is changing from the past "risk-averse tool" to the "reserve core" of the new era. In the future, with the continued evolution of the interest rate cut cycle and international games, gold is expected to play a more important role on the global monetary stage.