PRECIOUS METALS | Central Banks Plan Net Cuts to Dollar Holdings and Shift Toward Gold, Survey Finds

A survey by the Official Monetary and Financial Institutions Forum (OMFIF) found that global central banks are accelerating adjustments to their foreign-exchange reserve allocations as U.S. political and geopolitical risks rise. According to Jin10, OMFIF’s survey of 74 central banks showed that, for the first time, more central banks plan to reduce their U.S. dollar allocations over the next decade than plan to increase them, indicating waning appeal for the dollar. The report said geopolitical factors have become a major driver behind reduced willingness to invest in the dollar. It added that rising uncertainty around U.S. trade policy has also contributed to a broader trend toward de-dollarization. Despite these shifts, the dollar still accounts for about 58% of global central bank reserves and is expected to remain dominant in the near term. At the same time, central bank demand for gold has risen markedly. A record share of surveyed institutions said they plan to increase gold allocations to hedge geopolitical risks and instability in the financial system. The report also noted growing interest in the euro and the Chinese yuan, which have drawn more attention for use in international trade and for diversification. Some emerging-market currencies were also viewed more favorably. Overall, the survey described a gradual diversification of the global reserve system, with the dollar still leading but with its marginal advantage declining.