Why Is Gold Overtaking Currencies in Global Reserve Allocation?
Global Reserve Shift
Over the last decade, the structure of global foreign exchange reserves has undergone a significant transformation. The US dollar’s share has declined to nearly 40 percent, the lowest level in at least two decades, while gold’s share has risen sharply.
Central banks across emerging and developed markets are increasingly diversifying away from fiat currencies toward tangible stores of value.
Gold now accounts for approximately 28 percent of global reserves, surpassing the combined share of the euro, yen and pound. This marks the highest gold allocation since the early 1990s.
Key Drivers Behind the Shift
🔹 Currency weaponisation concerns.
🔹 Geopolitical fragmentation.
🔹 Inflation hedging.
🔹 Declining confidence in fiat dominance.
Over the last ten years, the dollar’s reserve share has fallen by nearly 18 percentage points, while gold’s share has increased by around 12 points. In 2025 alone, gold prices surged nearly 65 percent, marking the strongest annual rally since 1979.
Macro-focused traders often align exposure to such structural shifts using a Nifty Market View.
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Strengths of Gold
🔹 No counterparty risk. 🔹 Global acceptability. |
Limitations
🔹 No yield generation. 🔹 Storage costs. |
The rise of alternative payment systems, including BRICS-linked settlement mechanisms, has further accelerated reserve diversification.
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Opportunities
🔹 Structural demand from central banks. 🔹 Hedge against systemic risk. |
Threats
🔹 Short-term volatility. 🔹 Policy intervention risk. |
Investment Perspective
Gold’s role is evolving from a cyclical hedge to a strategic reserve asset. While short-term price movements can be volatile, long-term allocation trends suggest sustained demand.
Portfolio allocators often assess gold exposure alongside equity indices using a BankNifty Market View.
Investor Takeaway
Derivative Pro & Nifty Expert Gulshan Khera, CFP®, believes gold’s resurgence reflects deep structural shifts in global finance rather than a speculative phase. Strategic allocation, not tactical chasing, is key. More global market perspectives are available at Indian-Share-Tips.com.
SEBI Disclaimer: The information provided is for informational purposes only and should not be construed as investment advice.
Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services
