The latest report from the World Gold Council (WGC) sheds light on the fact that central banks will continue their de-dollarization process by accumulating more of the precious metal into their reserves and diversifying their holdings. The move indicates a gradual shift away from the US dollar, as gold is becoming an alternative investment.
Several developing countries have already made billions in profit, as the accumulation spree began in 2022. The Spot XAU/USD index has risen close to 140% since then, doubling its investments in five years. Holding the US dollar comes at a cost of rising national debt and inflation. De-dollarization of their reserves is the only option to safeguard their economy from being severely affected by America’s decisions.
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De-Dollarization: 84% of Surveyed Central Bank Officials Expect Gold’s Share to Rise
The WGC’s survey involved officials from 76 banks, and 84% of the officials said that gold accumulation will keep increasing. Also, 74% of the respondents anticipate the share of the US dollar to decline in the central bank reserves. The development highlights that de-dollarization is rising, with the US dollar being given less importance over gold.
Apart from concerns about debt stability, emerging economies are also worried about the independence of the Federal Reserve. US President Donald Trump is embroiling the Federal Reserve in politics, removing its independent shield. Trump has also been an opponent of de-dollarization, warning countries of serious consequences if they ditch the US dollar.
“All those factors might be on the minds of central bankers as they think about the composition of the reserve assets going forward,” Shaokai Fan, global head of central banks and head of the Asia-Pacific at the World Gold Council, told Nikkei Asia. De-dollarization might enter full speed after Trump’s tenure comes to an end in January 2029. Their gold investment might have paid off further in the next three years.