BRICS is not the only opposition that the U.S. dollar is competing against in 2023. The U.S. is also fighting ‘gold’ which could soon be backed by the new BRICS currency. Gold is up nearly 20% since last year and its price is increasing steadily and is staying true to the phrase ‘hedge against inflation’. Surprisingly, this time around, the surge in demand for gold is not by retail or institutional investors but comes from Central Banks of BRICS countries.
Also Read: BRICS Countries Buying Large Amounts of Gold To Topple the U.S. Dollar
The main buyers of gold in 2023 are the Central Banks of Russia, China, and India, reported the World Gold Council. The dollar is losing value due to debt accumulation and many countries are avoiding the debt trap.
According to the World Gold Council, China purchased 102 tonnes of gold and Russia brought 31.1 tonnes of the precious metal in Q1 of 2023. On the other hand, India added 2.8 tonnes to its gold reserves in 2023 and there is a sense of eagerness to accumulate further. The leading BRICS nations plan to back their native or new currency with gold hereon and not the dollar.
Also Read: BRICS: U.S. Dollar Fading as Supply & Demand Dips
BRICS: Gold to the Rescue Against the U.S Dollar
The next BRICS summit will be held in August in South Africa and reports suggest that the new currency could be backed by gold. Using gold as the benchmark could put the dollar on the back foot and lose its strength in global trade. While the dollar is losing its dominance, the demand for gold is heading north and could remain stable for years. The development is an added advantage for BRICS countries to launch a new currency backed by gold.
Also Read: Will Canada & Mexico Join BRICS To Eliminate U.S. Dollar’s Dominance?
In conclusion, a time when countries hold gold as reserves and not the U.S. dollar is not too far away. How BRICS handles the next meeting in South Africa can seal the dollar’s fate in the coming years.