Gold demand set to climb as sovereign capital rethinks dollar reliance
Central banks and sovereign wealth funds are planning to increase gold holdings as a survey shows a sharp rise in institutions citing US debt as a negative for the dollar's reserve role, signaling structural demand for the metal.
Gold demand is set to climb as a growing number of central banks and sovereign wealth funds plan to increase their holdings, driven by a reassessment of the dollar's reserve status amid rising US debt concerns.
A survey of sovereign institutions managing $29 trillion in assets found that one-third intend to add gold to their portfolios. This comes on top of two years of already elevated official sector buying. The proportion of central banks citing US debt as a negative for the dollar's reserve role tripled to 61% in 2025 from 20% in 2024, according to the report. This shift is structural rather than tactical, making the gold pivot stickier and harder to reverse.
For foreign exchange and currencies traders, this trend has direct implications. Central bank gold purchases reduce the share of dollar reserves, potentially weighing on the greenback over the medium term. The breakdown of the traditional bond-equity diversification relationship during recent inflation episodes has further incentivized gold as a portfolio hedge. Traders can monitor real-time gold price movements and their impact on currency pairs via NowPrice's live FX dashboard, which tracks XAU/USD and related instruments.
Looking ahead, the key question is whether this gold pivot accelerates. Upcoming data on central bank reserve composition and sovereign fund allocations will provide further clues. The next IMF COFER report, due in the coming months, will reveal whether the trend is already visible in official statistics. Any escalation in US fiscal concerns could prompt additional buying, while a stabilization of the dollar's reserve status might slow the pace. For now, the structural drivers remain firmly in place.