Central banks are accumulating gold - dedollarization is increasing

45% of global central banks have indicated plans to increase their gold reserves in the next 12 months, the highest level ever recorded, more than doubling the figure from 2020.

6/18/20262 min read

Will gold return to the center of global currency?

For decades, the US dollar has dominated global foreign exchange reserves. However, geopolitical shifts, persistent inflation, and the use of financial instruments such as economic sanctions have prompted many countries to reconsider the structure of their national reserves. Against this backdrop, gold has emerged as a unique asset. Unlike government bonds or foreign currencies, gold carries no counterparty risk, is not dependent on the solvency of any particular country, and cannot be frozen by the international financial system.

One of the strongest drivers of current demand for gold is the ongoing "de-dollarization" process in many emerging economies. Countries in Asia, the Middle East, and the BRICS group are continuously seeking ways to reduce their dependence on the USD in international trade and foreign exchange reserves. While this process is not yet sufficient to replace the role of the greenback, it is creating significant demand for neutral reserve assets, with gold being a top choice.

The simultaneous increase in reserves by a large number of central banks indicates that this is no longer an individual decision of each country, but is becoming a systemic trend in global finance.

Is the central bank the owner of the gold mine?

A notable shift in the current cycle is the role of central banks in the gold market. Previously, demand for gold came primarily from individual investors, ETFs, or the jewelry industry; however, in recent years, central banks have become the largest net buyers, consistently setting records for annual gold accumulation.

This creates a long-term demand that is less sensitive to short-term price fluctuations. Unlike ordinary investors, central banks typically buy gold with a long-term or even decade-long outlook, leading to increasingly tight supply in the market.

The fact that nearly half of central banks plan to buy more gold is not just a story for the precious metals market alone, but also a signal reflecting the increasing caution of monetary policymakers regarding the global economic outlook. As the world's largest national reserve managers simultaneously increase their gold holdings, it suggests they are preparing for a more volatile environment in terms of geopolitics, public debt, and the international monetary system.

Assessment and Conclusion

The fact that 45% of global central banks expect to buy more gold in the next 12 months is a significant milestone for the world's financial markets. This is not only a record high in the history of the World Gold Council survey, but also reflects a shift in the mindset of countries regarding reserve management.

With rising geopolitical instability, continuously soaring global debt, and a growing trend toward de-dollarization, gold is once again asserting its role as the ultimate reserve asset of the international financial system. And if the current trend continues, demand from central banks could become the most important driver supporting the gold market for years to come.

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