De-dollarization: why central banks are buying gold instead of US dollars
The US dollar's share of global foreign exchange reserves has fallen from around 71% in 2000 to roughly 56% today — its lowest level in over thirty years. Over the same period, gold's share of global reserves has climbed from approximately 13% to close to 30%. These two trends are connected, and understanding the connection helps explain one of the most important structural forces supporting gold prices since 2022.
De-dollarization is the gradual process by which countries reduce their reliance on the US dollar as a reserve currency, trade settlement currency, or store of value. It is not a sudden collapse of dollar dominance — the dollar remains the world's primary reserve currency by a wide margin. But the direction of travel has changed, and gold is the primary beneficiary.
The 2022 sanctions shock changed the calculus for reserve managers
The single event most frequently cited as an accelerant of reserve diversification away from the dollar is the freezing of approximately $300 billion in Russian central bank reserves held in Western financial institutions following the 2022 invasion of Ukraine.
The freezing of those assets demonstrated something that reserve managers in many countries had previously treated as a theoretical risk: dollar reserves held in foreign financial institutions are not immune to geopolitical action. They can be frozen by the governments of those countries, without the consent of the holding central bank, as a tool of foreign policy.
Physical gold held in a central bank's own domestic vaults cannot be frozen this way. It carries no counterparty risk and is not subject to any foreign government's jurisdiction. After 2022, the premium placed on this property rose sharply among emerging market central banks with large dollar holdings and concerns about their own geopolitical exposure.
How the reserve composition shift looks in data
The dollar's declining share of global reserves is documented by IMF COFER data, which tracks the currency composition of global foreign exchange holdings. In 2000, the dollar accounted for roughly 71% of allocated reserves. By 2025 that had fallen to approximately 56% — a fifteen percentage point decline over twenty-five years, with the pace accelerating after 2022.
Gold does not appear directly in the COFER currency breakdown, but World Gold Council data tracks central bank gold holdings separately. Central banks globally purchased over 1,200 tonnes in 2025, the highest annual total in decades. The 2026 forecast from the WGC is approximately 850 tonnes — below the 2025 peak but still more than double the pre-2022 annual average of 400 to 500 tonnes.
Dollar reserve share
Fell from 71% in 2000 to approximately 56% in 2025. The IMF notes that the decline has not been replaced primarily by other currencies — it has been replaced partly by gold and partly by a broader range of smaller currency reserve holdings.
Gold reserve share
Risen from around 13% of global reserves in 2017 to approximately 30% by late 2025. This is the highest gold share in global reserves since the early 1990s, representing a multi-decade reversal of the long post-Bretton Woods decline in official gold holdings.
Central bank purchases
More than 1,200 tonnes in 2025. WGC forecasts approximately 850 tonnes for 2026. Both figures compare with a pre-2022 average of 400 to 500 tonnes annually, indicating a structural step-change in official sector demand rather than a cyclical fluctuation.
WGC survey on intent
68% of central banks surveyed by the World Gold Council in early 2026 stated an intention to increase their gold holdings this year. That is the broadest stated accumulation intent the WGC has recorded since it began tracking central bank survey data.
The buyer base is broadening beyond the original leaders
China and Russia were among the first major central banks to shift aggressively toward gold in the years following the 2008 financial crisis. China's gold reserve disclosures are periodic and widely believed to understate actual holdings, making precise tracking difficult. Russia had been building reserves before its access to Western financial markets was curtailed.
Since 2022, the buyer base has widened considerably. Poland has become one of the standout individual buyers, with a stated target of 700 tonnes and a publicly articulated goal of raising gold to 20% of its total reserves. Kazakhstan has been a consistent buyer funded partly by domestic production. Turkey, India, and a growing number of Gulf and Southeast Asian central banks have also added gold.
The most recent expansion is into Southeast Asia, where Indonesia and Malaysia — both absent from the gold market for extended periods — have returned as net buyers. African central banks including Uganda's central bank have also initiated domestic gold buying programmes. The breadth of participation is now greater than at any point in the post-Bretton Woods era.
Four properties that make gold the primary beneficiary
No counterparty risk
Physical gold held domestically is not a claim on any other institution. Unlike dollar reserves held at the Fed or in US Treasury securities, it cannot be frozen or sanctioned. This is the property that has driven the most urgent accumulation since 2022.
No currency denomination
Gold is not denominated in any sovereign currency. Central banks diversifying away from dollar concentration cannot simply replace dollars with euros or yuan without creating a new single-currency dependency. Gold is the one major reserve asset that avoids this problem.
Liquidity
Gold markets are among the most liquid in the world. A central bank can sell gold relatively quickly in large size if it needs to raise foreign exchange. This liquidity profile is better than many alternative reserve assets and makes gold a credible reserve asset rather than simply a storage medium.
Long-run value preservation
Over multi-decade timescales, gold has preserved purchasing power in a way that fiat currency savings have not. For central banks managing assets over generational timeframes, the long-run real return on gold is a meaningful consideration alongside liquidity and safety.
Structural demand is a floor, not a price driver on its own
Central bank buying provides a structural floor for gold prices rather than a near-term price driver. Central banks are not momentum traders. They do not accelerate purchases when gold rallies or pause entirely when it corrects. They buy on strategic timelines measured in years, absorbing supply steadily. This persistent demand reduces the volume of gold available to the broader market and sets a natural price support below which selling pressure is absorbed.
The short-term gold price is driven primarily by real yields, the US dollar, and ETF flows from Western investors. When those forces are also positive for gold — falling real yields, a weaker dollar, and rising ETF inflows — the combination with central bank buying can produce strong, sustained rallies. When ETF investors are selling, central bank demand can slow the decline but typically cannot reverse it alone. Understanding this distinction helps separate the structural story from the trading signal.