How central banks’ turning away from U.S. dollar is affecting gold prices Premium

Central banks' shift from the U.S. dollar to gold is driving bullion prices to unprecedented highs amid geopolitical uncertainty.

The global move away from the U.S. dollar is gathering pace as broader geopolitical uncertainty raise concerns over the stability and predictability of the dollar-centric financial system. In response, central banks, particularly in emerging markets, are boosting their gold reserves, pushing bullion prices to volatile highs.

Although the dollar remains the world’s dominant reserve currency, its share of global foreign-exchange reserves has been steadily declining for more than a decade. An International Monetary Fund survey shows the dollar’s share fell from about 71% in 1999 to 59% by 2021, reflecting a gradual but persistent diversification away from dollar-denominated assets.

Emerging-market central banks across Asia, West Asia and parts of Eastern Europe have led the shift, steadily increasing gold allocations while trimming marginal exposure to U.S. Treasuries. According to the World Gold Council, central banks added 1,045 tonnes to global gold reserves in 2024.

Gold’s appeal lies in its neutrality: unlike fiat currencies, it is not tied to any issuing government, carries no credit risk, and cannot be frozen or sanctioned. These attributes have gained importance in an increasingly fragmented geopolitical landscape.

Gold crosses $5000 per ounce on heightened geo-political pressure

The precious metal suffered a sharp reversal on Friday (January 30, 2026). Gold tumbled by over 11.7% globally and hit a low of $4,942/oz after touching a record high of $5,598. However, gold is still up more than 13% for the month.