Central Banks Flock to Gold as Dollar Share Continues to Slip

A recent survey of central banks shows that they are increasingly favoring gold as a reserve asset. According to the poll, 84% of respondents believe that gold will account for a larger share of overall reserves in five years compared to 76% last year.

The survey, which was conducted by YouGov and the World Gold Council, also found that 74% of central banks expect the US dollar's share of total reserves to decline. The dollar remains the top reserve currency but its grip is easing.

In terms of actual reserves, 45% of central banks expect their gold holdings to rise over the next year, which is a new record for this expectation. Among emerging-market and developing economies (EMDE), roughly half of respondents anticipate an increase in gold reserves, while the other half expect no change.

The survey's findings suggest that central banks are shifting their reserve preferences towards gold as they seek to diversify and protect their assets. This trend is likely to continue in the coming years, with 89% of respondents expecting global official gold reserves to increase over the next 12 months.