Gold sets a historic milestone; the Federal Reserve's "cool approach" seems reasonable but actually avoids the core trend.

Huitong Network, September 7— The Federal Reserve can use various technical details to explain the “coincidence” of gold overtaking U.S. Treasury securities, but it cannot avoid or downplay the profound transformation behind this milestone: gold has once again become a crucial core monetary asset in the global financial system.

There is an insightful saying in the business world: if something becomes the focus of everyone’s attention, but someone tries hard to explain “it’s not that important,” it only means that this matter carries far more weight than it appears.

Looking at the Fed’s latest research commentary, this statement finds its most apt proof. Previously, the market witnessed a historic breakthrough for gold: in 2025, the total market value of official gold reserves held by countries worldwide officially surpassed the market value of U.S. Treasuries held by these nations.



This milestone was first reached in 2025 and was subsequently recognized by top financial institutions such as the International Monetary Fund (IMF), fundamentally reshaping the structure of global reserve assets. However, the Fed tried to “cool down” the situation by attempting to downplay the significance of this event from a technical perspective.

The timing of the Fed’s comments is particularly thought-provoking. Recently, the U.S. Treasury announced that it would double its holdings of long-term Treasuries through a bond repurchase program. Although the authorities did not admit this is a yield curve control measure, the market should not ignore this signal.
The reasoning is simple: if there is sufficient private and institutional demand for long-term U.S. Treasuries in the market, the U.S. government would have no need to intervene directly to backstop or inject liquidity. Against this backdrop, gold’s rising status in the global reserve system should not be understated—on the contrary, it deserves the market’s full attention.

Objectively speaking, the Fed’s interpretation is not entirely without merit; the two doubts it raised do carry certain logic.

First, the core driver behind gold reserves overtaking U.S. Treasuries is the sharp rise in international gold prices, not a recent buying frenzy by central banks. The pace of gold purchases by central banks has not skyrocketed; it is the valuation increase from gold prices that created this historic gap.

Second, much of the current total global gold reserve stock is a legacy from the Bretton Woods system era, accumulated over decades rather than actively built up by countries in recent years.

However, these technical revisions in detail cannot undermine the core significance of this milestone.

Even the Fed’s own data confirm: even if the enormous gold reserves held by the United States are excluded, by the end of 2025, the market value of all sovereign gold reserves globally will still reach $4 trillion, slightly exceeding the $3.9 trillion in U.S. Treasuries held by other countries.

More importantly, the actual actions of central banks worldwide have already signaled the continuously growing strategic value of gold.

In recent years, global central bank gold buying has remained high year after year, with annual purchase volumes directly doubling compared to the average over the last decade. According to industry research, a record 45% of central banks plan to further increase gold reserves in the next 12 months; 89% of institutions predict that total global central bank gold reserves will continue to rise.

Over a longer time frame, 84% of industry organizations believe gold’s share in global reserves will continue to grow over the next five years; 74% are convinced that the dollar’s share of global reserve assets will gradually decline.

Of course, none of these changes mean that the U.S. dollar will immediately lose its status as the world’s dominant reserve currency, nor do they mean that U.S. Treasuries have completely lost their value. Today, U.S. Treasuries remain the world’s most liquid and deepest-traded core financial asset, and their market position cannot be easily shaken in the short term.

But that is not the point. What truly deserves everyone’s attention is the core trend: the logic behind global central bank reserve allocation has fundamentally changed.

Countries no longer rely solely on the dollar and U.S. Treasuries; instead, gold is now regarded as a core strategic tool that runs parallel to and can even partially replace dollar-denominated assets.

The Federal Reserve can explain, with various technical details, that gold’s overtaking of U.S. Treasuries is a “coincidence,” but it cannot avoid or downplay the underlying transformation marked by this milestone: gold has once again become a crucial core monetary asset in the global financial system.