By Marcela Ayres
BRASILIA, March 31 (Reuters) – Brazil’s central bank doubled its gold holdings in 2025, making the metal the second-largest component of its foreign exchange reserves after the U.S. dollar, according to its annual report released on Tuesday.
Gold accounted for 7.19% of total reserves, up from 3.55% in 2024, the highest level since the series began in 2016. Meanwhile, the share of U.S. dollar assets fell to 72.00% from 78.45%, its lowest level on record.
Brazil joined other countries such as Finland, Turkey and China that continued heavy gold purchases last year despite elevated prices, as the metal is widely seen as a “flight-to-quality” asset in times of market volatility.
The Brazilian central bank said in the report that reserve management became more diversified over the year, including increased allocations to gold, whose price also showed greater volatility in 2025.
The return on total reserves in Latin America’s largest economy rose 9.18% last year, with holdings reaching $358.23 billion as of December 31. Policymakers attributed the increase mainly to stronger investment performance, driven primarily by interest income and, to a lesser extent, by currency movements.
“Over the course of 2025, there was a significant move in the short end of the U.S. sovereign yield curve – at maturities most relevant for international reserves – with declining yields. This generated mark-to-market gains in the interest component, boosting returns beyond carry,” the report said.
“In foreign exchange terms, the depreciation of the U.S. dollar against other reserve currencies also contributed positively to overall returns.”
(Reporting by Marcela Ayres; Editing by Aurora Ellis)
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