Central banks plan dollar sales amid US risk

XAU/USD is trading at 4005.5 dollars per ounce, down 0.22% on the day, as gold digests a fresh wave of central bank surveys signaling a structural pullback from dollar reserves. The pair's slight dip masks a bigger story: institutional demand for gold as a dollar alternative is quietly reshaping how the world's monetary authorities think about reserves.

At a Glance

• XAU/USD sits at 4005.5, down 0.22% on the day
• A survey of 74 central banks found more plan to cut dollar holdings than raise them over the next decade, a first since 2023
• The dollar's share of global reserves fell to a two decade low last year, according to JPMorgan data
• Central banks are gradually rotating toward the euro, the renminbi, and smaller currencies like the Singapore dollar and South African rand
• Geopolitical risk, not just US politics, is now the top reason cited for avoiding dollar exposure

Why Gold Is Holding Near Record Territory

Gold's position above the 4000 dollar mark reflects more than a single day's headlines. The Official Monetary and Financial Institutions Forum, a London based research group, published survey results this week showing that for the first time since it began tracking reserve intentions in 2023, more central banks want to reduce dollar allocations than increase them. That survey ran from March through May and drew responses from 74 institutions worldwide.

The timing matters. Conflict in the Middle East, partly tied to US involvement, rattled energy markets this year, while President Trump has continued searching for new avenues to impose tariffs. Both developments have fed a perception that Washington's foreign policy has become harder to predict, and that unpredictability is now weighing on appetite for dollar assets more than domestic US politics ever did.

The De-dollarization Signal Behind the Price

Gold tends to benefit when confidence in reserve currencies wavers, and the data here is telling. The dollar's share of global central bank reserves slipped to a two decade low last year, based on JPMorgan figures. OMFIF's head of research, Andrea Correa, noted that dollar allocations have hovered near 58% over the past five years, a level that still marks clear dominance but no longer looks unshakeable.

The report was careful to note the dollar