Keyowrds: central bank gold reserves, global forex reserves, U.S. Treasuries decline, gold price surge, de-dollarisation trend, World Gold Council report, India RBI gold holdings, China gold purchases, U.S. dollar dominance, gold vs cryptocurrencies
Gold has surged to 20–22% of central bank gold reserves in mid-2025, making it the second-most important reserve asset after the U.S. dollar, yet ahead of the much-touted euro at 16%. Current gold holdings stand at ~36,700 metric tonnes, worth about USD 4.5 trillion, versus just USD 3.5 trillion in Treasuries as of mid-2025. This inversion is partly due to a 38% gold price surge this year, while long-term US bonds have underperformed, highlighting the U.S. Treasuries decline.
Purchases have been robust. The World Gold Council (WGC) noted net annual buys of 1,082 MT in 2022, 1,037 MT in 2023, and 1,180 MT in 2024—double the typical 400–500 MT of the previous decade. Metals Focus still projects ~1,000 MT by the year-end, while J.P. Morgan expects 900 MT, warning that prices—possibly topping USD 4,000/oz by mid-2026—may cool demand.
Several factors explain this de-dollarisation trend. Gold is a non-fiat, sanctions-proof asset outside SWIFT’s reach. In the WGC’s 2025 survey, 28 of 58 central banks planned further purchases. The Reserve Bank of India's gold holdings rose to 880 MT (~USD 91 billion) by June 2025, up from 840 MT a year earlier, while trimming U.S. T-bill exposure from USD 242 to 227 billion. Indian citizens hold another ~28,000 MT privately. China's central bank gold purchases have been far more aggressive, with >300 MT added in the past year to reach ~2,300 MT. Turkey, Russia, and Poland (61 MT) are also leading buyers. Many states are also moving reserves from London and New York into domestic vaults.
Still, U.S. dollar dominance endures. The greenback makes up 57.7% of global reserves in 2025, though down from 65% in 2015. The euro has climbed to 20.1%, while even Switzerland’s franc holds 0.8%. The IMF blames U.S. debt exceeding USD 35 trillion, political risks to Federal Reserve independence, and volatile tariff policy. Goldman Sachs has suggested gold could touch USD 5,000 if rate cuts arrive.
A weaker dollar is not wholly negative for the U.S., as Vice President JD Vance argues that it would boost manufacturing competitiveness. Yet higher borrowing costs will make Treasuries riskier, reinforcing gold’s appeal. Some economists speculate whether gold can be upstaged by cryptocurrencies like BitCoin as the next hedge, but for now, liquidity still lies with the dollar.
Curiously, retail investors remain focused on equities. Stock indices are strong, with VIX levels below 15 in India and the U.S., signalling calm. Are central banks seeing storms ahead—or are they simply panicking? Usually, its the retail investor who gets it wrong, while central bank governors go laughing all the way to, where else, the bank.
If a real rebalancing does come, the key questions are:
- which asset will challenge the dollar?
- when will the tipping point arrive?
- will policymakers will recognize it in time?
As 2008 showed, hindsight is clear but foresight scarce.
For retail investors, the lesson is simple: hedge your investments. Buy good stocks, but also buy gold, cash, bonds, and dollars. The “almighty dollar” may be dented, but it might say the same as Mark Twain said, "the reports of mydeathare greatly exaggerated. ”
