Dollar Bounce Masks Larger Trend Toward Diversification and Gold

The US dollar's share of global foreign exchange reserves rose to 57% in the first quarter of 2026, according to IMF data. This small rebound has led some investors to believe that the de-dollarisation trend has run its course.

Nigel Green, CEO and founder of deVere Group, disagrees with this assessment. He notes that a one-quarter bounce from a multi-year low does not erase nearly a decade of steady decline in the dollar's share of global reserves.

The dollar held 64% of global reserves in 2017 but has since declined by over seven percentage points. This trend is driven by structural changes rather than a deliberate shift away from the dollar. A significant portion of this decline comes from China's massive holdings, which account for more than a quarter of global reserves.

Central banks are not abandoning the dollar, but they are diversifying their portfolios by adding gold to their reserves. In fact, central banks have bought roughly 1,000 tonnes of gold annually for four consecutive years, double the pace of the previous decade. Gold now makes up a larger share of global central bank reserves than US Treasuries.

The increasing demand for gold reflects central banks' desire to hold assets that sit outside any single government's balance sheet and its bond market politics. The price of gold has risen significantly, trading near $4,697 an ounce, up nearly 40% over the past year, driven in part by official-sector buying.

The data suggests that reserve managers are hedging against a world where dollar assets alone no longer feel sufficient. While the US dollar remains the most important currency globally, its dominance is slowly eroding as institutions spread their bets more widely.