In recent years, central banks across the globe have been quietly increasing their gold reserves, marking an unusually high level of purchases. This trend reflects a growing preference for gold — a metal long valued not only for jewelry but also as a reliable store of wealth and a safe investment alternative.
Gold prices have surged sharply in recent times, delivering impressive returns of around 55–65% in just one year. Central banks across the world are also accumulating gold aggressively, quietly expanding their reserves at a remarkable pace. But this raises an important question — why? In fact, global central banks are projected to purchase nearly 900 tons of gold in 2025, marking the fourth consecutive year of above-average buying.
Something unprecedented is unfolding. The World Gold Council’s Central Bank Gold Reserves Survey 2025 has revealed a striking insight: 76% of central banks believe their gold holdings will increase over the next five years, while 73% expect global gold reserves to rise overall. The message is clear — central banks are steadily shifting from the U.S. dollar toward gold.
This raises a crucial question: Is the dominance of the dollar starting to fade, with gold emerging as the new focus? Let’s hear from experts to understand what’s really happening between gold and the dollar.
Here’s a clear, polished rephrasing of your passage: That’s why confidence in gold is growing.
According to The Economist, cited in a report by India Today, the global economy is currently expanding at less than 2%, while inflation remains at record highs. In such conditions, countries are turning toward safer assets. When central banks lose faith in the U.S. dollar or other fiat currencies, they seek more reliable alternatives.
Unlike bonds or paper money, gold carries no counterparty risk — it cannot default and remains immune to inflation. Traditional assets fail to offer such stability, which is why central banks are steadily increasing their gold reserves.
Why are central banks rapidly buying gold?
According to Informix Ratings’ Chief Economist, Manoranjan Sharma, the surge in gold reserves among central banks is driven by traditional motives for safety. Sharma explained that holding gold offers protection against financial restrictions, boosts policy credibility, enhances overall financial stability, and strengthens the financial system at a faster pace.
Sharma added that gold also acts as a safeguard against financial repression and the uncertainties surrounding emerging digital currencies. In essence, this is a well-planned structural move — not a short-term hedge against any immediate crisis.
Is the era of dollar dominance coming to an end?
According to the IMF’s COFER database, the U.S. dollar still makes up about 58% of total global reserves, but this share has been gradually declining. The dollar’s supremacy is now being challenged by both economic and political factors. Recent financial sanctions on Russia, along with similar actions against other countries, have raised concerns among many governments. Fearing potential restrictions, several nations are rethinking their exposure to American assets.
Unlike the U.S. dollar, gold can be stored domestically, traded globally, and remains independent of any single nation’s policies. This makes it especially appealing to emerging market economies seeking to reduce their dependence on Western financial systems.
Why is China so focused on gold?
The People’s Bank of China has emerged as one of the world’s most aggressive gold buyers, steadily increasing its reserves for 18 consecutive months up to mid-2025. Economists view China’s gold accumulation as part of a broader strategy — a hedge against possible U.S. sanctions and a move to strengthen non-dollar trade within the BRICS+ bloc.
What impact will this have?
According to Sharma, this sustained official buying has triggered a structural shift in gold prices, even amid rising global interest rates. He further noted that central bank purchases reinforce gold’s role as a dependable long-term asset, encouraging investment through mining equities and sovereign gold bonds.
In addition to central bank demand, inflation volatility, the rise of digital currencies, and intensifying geopolitical rivalries are also driving gold’s upward momentum. In this new era, gold is reasserting itself as the cornerstone of monetary sovereignty.
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