Central banks across the globe are ramping up their gold (GC=F) purchases at a record pace, while forecasting a gradual decline in U.S. dollar reserves in the years ahead.
According to the latest World Gold Council survey, 95% of central bank respondents anticipate global gold reserves will rise over the next 12 months. A record 43% say they intend to increase their own holdings during that time.
Meanwhile, 73% of central banks expect a moderate to significant reduction in U.S. dollar holdings within global reserves over the next five years. In the same period, they see an increased role for other currencies such as the euro and renminbi.
The U.S. dollar index (DX-Y.NYB) has dropped 9% year to date, raising fresh concerns about its long-term dominance amid escalating geopolitical tensions and ongoing trade conflicts. Broader concerns over America’s fiscal outlook have pushed investors toward assets in Europe and Asia, spurred by foreign stimulus expectations and more appealing valuations.
Gold prices have hit multiple record highs in 2025, propelled by surging central bank demand, investor flows into gold-backed ETFs, and market anticipation that the Federal Reserve could soon begin cutting interest rates.
In the past three years, central banks have added more than 1,000 tonnes of gold to their reserves annually—more than double the 400–500 tonne average seen in the previous decade.
While the outlook remains strong for precious metals, Citi analysts said Monday they anticipate gold demand could ease as political factors come into play heading into the 2026 election season.
“We strongly believe that President Trump cares about US popularity, GDP, and geopolitical success, and thus the Trump put exists,” wrote the analysts, adding that “he may dial back his policies or use innovative new ideas” to raise growth.
“Our work suggests that gold returns to about $2,500 to $2,700 an ounce by the second half of 2026,” the analysts said.
Year to date, gold is up approximately 27%.
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