Gold has indisputably become one of the biggest assets to trade in, leaving the US dollar in bits after its recent price hike. XAU is currently trading at the $24k price mark, with predictions signaling its rise to $2,900 very soon.
With consistent gold price spikes, the US dollar is now losing its global dominance inch by inch. The swelling debt numbers are also eroding USD prestige, catapulting gold to new price levels. With eccentric dynamics at play, what lies ahead for gold and USD? Let’s find out.
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XAU Becomes the Second Largest Asset Held in Global Banks
Per a recent assessment done by The Kobeissi Letter on X, the global central banks are heavily focused on piling gold. This has had a significant impact on its price and valuation. Per KL, gold’s share in international reserves has skyrocketed to 17.6%, which is dubbed a massive surge in the last 27 years.
Moreover, with global central banks’ obsessive road purchasing of gold, the price of XAU is poised to note significant price hikes in the near future.
“Gold’s share of global international reserves jumps to 17.6% in 2023, the most in 27 years. This share has almost doubled since 2016 as central banks have ramped up purchases.”
In its latest feat, the precious yellow metal is the most hoarded metal at present. Gold has, exceeded Euro reserves on an international plain. The assessments later shared how global gold purchases have made nearly 290 metric tons of gold in Q1 alone.
“XAU is also now the 2nd largest asset held in global central banks’ reserves, exceeding the Euro for the 1st time ever. Meanwhile, central banks’ net gold purchases saw a new record in Q1 2024 of 290 metric tons. World central banks are piling into gold.”
The US Dollar’s World Share Declined By 48%.
As global banks pivot towards hoarding gold in massive numbers, this sudden shift has injured the US dollar’s prestige in the long haul. The KL’s notable insight also accentuated the US dollar’s declining metrics as compared to the XAU. The platform shared that the US dollar’s share in world reserves has gone down 48% from 2017.
“Central banks’ reserves exceeded the Euro for the first time ever. The number one is still the US dollar, but its 48% world share is down from ~60% in 2017.”
Also Read: Gold & Bitcoin: Dual Currency Contenders To Bring Down The US Dollar?
With inimical forces gnawing at the US dollar in terms of new currency contenders and rising debt uprisings, it seems that the US dollar is currently battling an intense global battle. With BRICS and ASEAN calling for a collective multipolar world, the USD may soon face significant price troubles if it continues to erode at a rapid pace.