GLD Surges as Gold Becomes No. 2 Global Reserve Asset

Gold prices have surged in 2025, lifting the SPDR Gold Trust (GLD) to a year-to-date gain of 27% and putting the metal back in the spotlight for investors worldwide.

While multiple catalysts have contributed to the rally—including financial market volatility, mounting fiscal deficits and rising trade tensions—one of the biggest drivers has been central banks. 

According to a new report from the European Central Bank, gold is now the second-largest central bank reserve asset in the world, surpassing the euro and trailing only the U.S. dollar. 

GLD gained 0.3% in afternoon trading. The $99.9 billion fund has pulled in a net $6.2 billion this year.

Central Bank Demand for Gold

Global central banks purchased over 1,000 metric tons of gold in 2024, the ECB said—more than double the annual average of the prior decade. That buying spree pushed total central bank holdings to 36,000 metric tons, just shy of the all-time high of 38,000 metric tons set in 1965 during the Bretton Woods era.

Gold now accounts for 20% of total global foreign exchange reserves, edging out the euro at 16%, with the dollar still dominating at 46%.

“Survey data suggest that two-thirds of central banks invested in gold for purposes of diversification, while two-fifths did so as protection against geopolitical risk,” the ECB wrote.

Countries like China, India and Turkey have led the charge, motivated by concerns about sanctions and the evolving global monetary order. 

Gold Prices Reflect Market Anxiety

The ECB report highlights that while gold historically moved inversely with real interest rates—particularly from 2008 to 2022—that relationship has weakened in recent years. Since Russia’s full-scale invasion of Ukraine, gold prices have increasingly reflected geopolitical anxieties rather than just economic fundamentals.

That shift is reshaping how institutions and investors view the metal. It’s no longer just a hedge against inflation or falling rates but a geopolitical safe haven in an increasingly fragmented world.

With central bank demand showing no signs of slowing and global uncertainty remaining elevated, GLD and other gold-linked ETFs could continue to shine.