Geopolitical tensions help gold dethrone US bonds as top reserve asset

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Gold has overtaken US bonds as the world’s top reserve asset. This is the result of strong demand for the metal fuelled by geopolitical rancour, as well as longer-term efforts by some countries to diversify away from the dollar. Gold is seen as a safe haven because it is scarce, which gives it intrinsic value, and highly liquid, because it is traded globally at high volume. Bullion accounted for 27% of central bank reserve assets at the end of last year, up from 20% a year before, while US bonds fell from 25% to 22%. Reserve levels are not quite where they were during Bretton Woods, when the US dollar was pegged to gold, but they are getting closer.