According to calculations by Deutsche Bank's team, based on the current spot price of gold, the proportion of gold in global foreign exchange plus gold reserves has risen from 24% at the end of June this year to 30%. For gold’s share to equal and surpass that of the US dollar, the gold price needs to rise above $5,790 per ounce—assuming no change in the quantity of gold held. At that point, gold and the US dollar would each account for 36% of global reserve assets.
The role of gold in global central bank reserves is undergoing a historic shift. As of now, gold accounts for over 30% of the total assets comprising global foreign exchange reserves and gold, while the share of the US dollar has dropped to 40%.
According to the latest calculations by Deutsche Bank, if the price of gold exceeds $5,790 per ounce, gold will achieve parity with the US dollar in global reserves, each accounting for 36%, marking a historic milestone. This price is only about 33% higher than current levels.
The robust rise in gold prices over the past six months has pushed the share of gold reserves from 24% to 30%, while the share of the US dollar fell from 43% to 40%. A survey by the World Gold Council this year shows that 43% of central banks plan to increase their gold holdings, up from 29% the previous year, and 95% of reserve managers expect global central bank gold holdings to rise over the next 12 months.
This trend accelerated after the US weaponized the dollar in response to the Russia-Ukraine conflict in 2022. At that time, central banks around the world increased their gold reserves at the fastest pace in 55 years. For investors, the continued accumulation by central banks suggests long-term support for gold prices, while the dominant position of the US dollar in the global reserve system faces structural challenges.
Gold reserve share surges by 6 percentage points in six months
Updated data from Deutsche Bank analyst Michael Hsueh showed last Friday that, based on the current spot price of gold, the proportion of gold in global foreign exchange plus gold reserves has risen from 24% at the end of June this year to 30%. This unprecedented jump occurred in just a few months.
At the same time, the share of the US dollar under the same metric fell from 43% to 40%. This means the gap between gold and the US dollar has narrowed from 19 percentage points to 10 percentage points, shrinking by nearly half.
Deutsche Bank's team further calculated that for gold's share to match and surpass that of the US dollar, the price of gold would need to rise above $5,790 per ounce – assuming no change in the amount of gold held. At that point, both gold and the US dollar would account for 36% of global reserve assets.
Central banks' willingness to increase holdings continues to strengthen.
As early as July this year, Deutsche Bank explored whether central bank gold purchases would become a constraint on gold prices. The conclusion at the time was negative. Data shows that central banks' preference for gold is only increasing.
A survey conducted by the World Gold Council between February 25 and May 20 this year found that the proportion of central banks planning to increase their gold holdings rose from 29% in the previous year to 43%. More notably, 95% of reserve managers expect global central bank gold holdings to increase over the next 12 months, up significantly from 81% the previous year.
The starting point of this trend can be traced back to November 2022. At that time, gold prices hit a ten-year low, but it was precisely at that juncture that central banks began purchasing gold at the fastest rate in 55 years. This shift occurred several months after the U.S. weaponized the dollar due to the Russia-Ukraine conflict and is regarded as the largest de-dollarization movement since the end of the Bretton Woods system. Since then, gold prices have continued to rise.
Measurement Standard: Foreign Exchange Reserves Rather Than Total Assets
Deutsche Bank emphasized that discussing the proportion of gold in central bank assets requires clarification. Compared to total central bank assets, the ratio of gold to foreign exchange plus gold reserves is more meaningful, as these are the only assets denominated in foreign currencies that can be used to defend domestic currency.
Take the European Central Bank (ECB) as an example. As of the end of September, gold accounted for 80% of its foreign exchange plus gold reserves but only 18% of total assets. The ECB's total asset size at the end of 2024 was 6.4 trillion euros, of which 4.5 trillion euros (71%) were "euro-denominated securities issued by eurozone residents," assets denominated in the domestic currency.
The situation in the United States is similar. As of the end of September, gold accounted for 96% of U.S. foreign exchange plus gold reserves but only 15% of total assets.
The Deutsche Bank team therefore believes that reserve managers are more likely to assess their gold holdings based on the proportion of gold in foreign exchange plus gold reserves, as only this portion of assets can be used for currency defense when necessary.
