US Dollar Slips as Gold Takes Center Stage in Global Reserves

 

The US dollar’s dominance in global foreign exchange reserves is fading fast. New data shows the dollar now accounts for roughly 40% of total global reserves, the lowest level in at least two decades.

Why the Dollar Is Losing Ground

Over the past ten years, central banks have steadily reduced their reliance on the US dollar. In that period alone, the dollar’s share has fallen by nearly 18 percentage points.

This trend reflects rising concerns about US debt, geopolitical tensions, sanctions risk, and long-term currency stability. Instead of concentrating reserves in a single currency, many countries are choosing to diversify.

Gold Is the Big Winner

As the dollar’s share declines, gold has emerged as the primary beneficiary. Gold now represents about 28% of global reserves, its highest level since the early 1990s.

Remarkably, gold now makes up a larger share of reserves than the euro, Japanese yen, and British pound combined. This signals a clear shift toward assets that are not tied to any one government or political system.

Why Central Banks Are Stockpiling Gold

Gold is viewed as a safe haven during periods of uncertainty. It carries no credit risk, cannot be frozen through sanctions, and tends to hold its value during inflation or currency weakness.

With geopolitical risks rising and financial systems under strain, central banks see gold as a dependable store of value.

Impact on Markets

This shift is already showing up in price action.

• Gold surged nearly 65% in 2025, its biggest annual gain since 1979.

• The US dollar index fell about 9.4%, marking its weakest year in eight years.

What It Means Going Forward

While the US dollar remains the world’s primary reserve currency, its dominance is clearly eroding. The growing role of gold highlights a long-term move toward safety, diversification, and reduced political risk.

If current trends continue, gold is likely to remain a core pillar of global reserves for years to come.

Key Takeaways

• US dollar share of global reserves: ~40%

• Gold share of global reserves: ~28% (highest since the 1990s)

• Gold now exceeds euro, yen, and pound combined in reserves

• Gold prices jumped 65% in 2025

• Dollar index dropped 9.4% in 2025