Global foreign exchange reserve structure undergoes a major change: the US dollar share drops to a multi-decade low below 60%

2025 has witnessed a major turning point: the annual increase in international gold prices exceeded 64%, setting the highest yearly growth record since 1979. This data reflects not only the rise in precious metal prices but also a profound shift in global foreign exchange reserve allocation strategies. The latest data released by the International Monetary Fund (IMF) is remarkable — the US dollar’s share in global foreign exchange reserves has fallen below 60% for the first time, reaching a multi-decade low. This shift precisely validates the core topic discussed at multiple sub-forums during last year’s annual meeting: central banks are undergoing a fundamental adjustment in their reserve asset allocations.

Gold Becomes the Central Bank’s Preferred Asset, Gold Prices Hit 46-Year Record

Compared to traditional dollar assets like US Treasuries, gold is gradually becoming the preferred reserve tool among global central banks. A survey by the World Gold Council highlights this trend: up to 95% of central banks indicate they will continue to purchase gold as an important component of foreign exchange reserves. This is not a coincidence but a reflection of a collective decision by central banks worldwide. Ray Dalio, founder of Bridgewater Associates, pointed out that amid intensified great power competition and rising uncertainty in monetary policy, central banks are re-evaluating their demand for gold reserves, and this gold-buying frenzy is profoundly changing the demand structure of the global gold market.

US Dollar Reserve Share Declines, Central Banks Hedge Risks with Physical Assets

The decline in foreign exchange reserve share implies a reassessment of the US dollar’s creditworthiness by central banks. When the dollar’s reserve share drops below the 60% threshold, it indicates that countries are using “non-credit risk bearing” physical gold to balance their over-reliance on dollar assets. This shift reflects a deeper economic logic: in an era of global economic restructuring and divergent monetary policies, central banks need more secure hedging tools. Due to its scarcity, recognized value, and independence from any single country’s credit, gold has become an ideal alternative.

95% of Central Banks Optimistic About Gold Outlook, Reserve Structure Faces Reshaping

The survey data from the World Gold Council further confirms the firmness of this shift. When up to 95% of central banks expect to continue increasing gold purchases in the future, it is no longer an isolated behavior of a few central banks but a collective consensus worldwide. The formation of this consensus is reshaping the composition of global foreign exchange reserves. In the coming years, we may see the dollar’s share in foreign exchange reserves continue to decline, while the proportions of gold, SDRs, and other diversified reserve assets increase. During this process, the demand pattern in the gold market is also undergoing a fundamental change—from primarily investment and speculative demand to being driven more by central bank reserve needs.

All these changes point to the same conclusion: global central banks are voting with their feet, actively reconfiguring their foreign exchange reserve structures, and the dominant position of the US dollar in global reserves is gradually being weakened.