Why Gold Is Taking Over Global Reserves

The Great Gold Rush: Central Banks Ditch the Dollar

Global Central Banks Pivot Towards Gold

The international financial landscape is experiencing a significant shift as central banks around the world re-evaluate their reserve holdings. Recent data, sourced from the IMF and relayed by Global Market Investor, highlights a dramatic decline in the dominance of the US dollar and a corresponding rise in gold's position as a preferred reserve asset.

This trend, which began around 2014 or 2015, has accelerated dramatically in the last three years, with a sharp drop in dollar reserves and a significant increase in gold holdings.

The Decline of the US Dollar

For decades, the US dollar reigned supreme, reaching its peak as a global reserve currency in the mid-2010s, where it accounted for a huge chunk of total reserves. However, the data for the first quarter of 2025 shows a sharp decline, with dollar reserves dropping from approximately 50% to around 40%.

This is a notable shift, with central banks diversifying their assets into other currencies, including the Chinese renminbi, and, most significantly, gold.

The Resurgence of Gold

The most striking trend is the resurgence of gold. Historically, gold has played a central role in international reserves, accounting for as much as 80-90% a century ago and 60-70% in earlier periods.

The data also indicates that gold reserves, which had fallen to less than 10%, have now climbed to an impressive 23-24%. This dramatic shift back to gold suggests that central banks are seeking stability and a hedge against the volatility of fiat currencies.

Key Takeaways:

1. US Dollar's Diminishing Role: The US dollar's dominance as a global reserve currency is on the decline, with its share of reserves falling by a significant margin in recent years.

2. Gold's Rising Prominence: Gold is making a strong comeback as a key reserve asset for central banks, with its share of total reserves more than doubling from less than 10% to over 20%.

3. Historical Precedent: The current trend of increasing gold reserves is a return to a historical norm. The speaker points out that gold once constituted a much larger percentage of global reserves, suggesting there is still significant room for growth.

4. Potential for Price Appreciation: The continued increase in demand from central banks could lead to a long-term bullish outlook for gold prices.

Important Announcement

From 15th of Aug 2025, we have started sharing all our strategy updates, rebalances, and important announcements on our official WhatsApp Channel

Why this change?

Because it’s simpler, faster, and right where you already are — WhatsApp makes staying updated effortless.
Stay updated with:

• Strategy updates & rebalances
• Exclusive announcements & offers
• Important reminders – all in one place

Here’s an instruction manual if you are new to Whatsapp Channels

Top Trending Strategies

What To Read This Week ?

Today’s Market Update

The GST Council released a long 90-plus page note. In this, nearly 90% of items were rationalized into just two GST rates. This step is being seen as a positive move by the government to push growth. Only luxury and sin goods faced higher tax, and most people are not complaining about that.

The surprise was in the market reaction. The day started strong with all indices opening higher. But within hours, the market slipped back and gave up all gains.

• As far as the current levels are concerned, the Nifty gave up all its gains and closed almost flat at minus 0.08 percent. The market remains stuck in a range, and only above 25,250 can it break out decisively.

• The Nifty Junior lost 0.46 percent, midcaps fell 0.63 percent, and small caps dropped 0.67 percent, showing weakness outside the main index.

• Bank Nifty, however, managed to hold steady and closed at the same level as the previous day.

• Gold was another big story of the day. After touching nearly 10,700 in the morning, there was some profit booking, and prices settled closer to 10,600 by 4 PM.

Other Market Triggers

• Out of the Nifty 500, there were only 143 advances against 354 declines.

• Mahindra and Mahindra stood out with a 6% gain. Reliance, Maruti, IT stocks, Kotak Bank, Jio Finance, NTPC, Power Grid, and BEL were among the major losers.

• Tata Steel gave up some ground after a strong previous session, while ITC and Nestle managed to sustain.

• FMCG stocks overall were strong, with names like Dabur and Britannia benefiting from GST changes.

• Bajaj Finance and Bajaj Finserv also gained on the back of GST removal on insurance.

What to watch next ?

• Many people were confused as to why good news did not push the market up further. The reality is that markets do not always move with the news. In fact, a lot of news is already factored into prices before it becomes official.

• At the same time, there are global issues weighing on the sentiment. The US remains the biggest force in world markets.

• President Trump has already tweeted that phase two and phase three tariffs could be applied on India if compromises are not made. This creates pressure and uncertainty. If this conflict escalates, the Indian market will surely feel the pain.

Get your Portfolio Momentum Report today and ensure your investments are positioned for success!

Meme Of The Day

Follow for Daily Market Updates and Insights