central banks are fleeing the dollar

A few days ago we saw how gold had exceeded $4,000 per ounce for the first time in its history and, as it could not be otherwise, it has raised a general alarm in the markets. And there are not exactly a few analysts who are already pointing to $5,000 by 2026. But the real story behind this historic rally is not only that gold is expensive: is that the dollar is losing its neutrality as a world reserve currency. In emerging countries and China is where this is being noticed the most, and central banks react accordingly.

A historic rise. gold accumulates a 50% increase so far in 2025, its best year since 1979. However, neither geopolitical uncertainty nor rate cuts nor dollar weakness fully explain the magnitude of the movement. Just like they explain Since Expansion, gold has continued to rise even with the truce in Gazasome recovery of the dollar and a Federal Reserve in standby mode. Something deeper is happening.

Central banks lead the purchase. Since the Russian invasion of Ukraine in 2022, central banks They have bought gold massively and constant. In this way, some emerging countries and China diversify their reserves to depend less on the US dollar. According to Goldman Sachscentral banks explain 19% of the expected rise in gold until the end of 2026, buying an average of 80 tons in 2025 and 70 in 2026. Bank of America also matches by pointing to central banks and small investors who push the price up.

Gold already competes with American Treasury bonds. The value of central banks’ gold reserves (excluding the United States) reached 3.93 trillion dollars at current prices, slightly exceeding the $3.92 trillion in US Treasury bonds held by foreign governments. Gold has gone from representing 10% of world reserves a decade ago to 24% by mid-2025. It is a structural change in the international monetary system.

Preparing for a post-hegemonic dollar world. What is at stake is the global financial architecture. Central banks in emerging economies are betting on a future where the dollar is no longer the neutral currency it has been for decades. Trade tensions between the United States and China, political pressures on the independence of the Federal Reserve and record debt levels Americans feed this narrative.

Individual investors join in. A wave of retail investors has recently added to institutional demand. In Japan, where gold exceeded 20,000 yen per gramdistributors such as Tanaka Precious Metals had to suspend sales due to the avalanche of orders. In Hong Kong and Türkiye, traditional gold-buying markets, families They are both buying and selling to take advantage of record prices. Gold Exchange Traded Funds (ETFs) they caught 26 billion dollars in the third quarter of 2025 alone, a record figure.

Around $5,000. Société Générale has just raised its forecast to $5,000 per ounce by the end of 2026, describing this goal as “increasingly inevitable.” Bank of America aims for the same level, while Goldman Sachs projects 4,900 dollars by December 2026. And in all the projections there is a common denominator: they assume that institutional demand from central banks will remain strong and that individual investors will continue to see gold as a refuge, especially in an environment of great uncertainty.

Risk. It’s not all good news for the precious metal. a survey from Bank of America shows that 25% of fund managers consider long positions in gold as one of the most saturated bets in the market. Just like they explain From the Financial Times, historically, when gold moves more than 20% away from its 200-day moving average, as is happening now, corrections of 20% to 33% usually occur. But even with that risk, everything indicates that the world is preparing for a monetary system where the US dollar no longer dominates alone.

Cover image | Jingming Pan

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