Central banks, including those from advanced economies, are increasingly buying gold to diversify away from the US dollar, according to a World Gold Council (WGC) survey. The survey, conducted between February and April, found that 29% of 70 central banks plan to purchase gold in the next 12 months, with 15% of those from advanced economies, the highest since 2019. About 40% of emerging market central banks also intend to buy gold.
The reasons for increased gold purchases include rebalancing reserves and hedging against risks such as rising inflation, US dollar exposure, and market instability. Despite gold’s high price, around $2,330 an ounce, central banks remain keen buyers.
In contrast, 56% of central banks from advanced economies and nearly two-thirds from emerging markets expect the US dollar’s share of global reserves to decline over the next five years. The IMF has reported a decline in the dollar’s share from over 70% in 2000 to about 55% in late 2023, describing it as “stealth erosion.”
The shift comes amid concerns about the dollar’s dominant role, especially following Western sanctions on Russia. However, the dollar remains the most dominant currency in global reserves.
