Global South Central Banks Boost Gold Reserves 48% Amid Trade Tensions

Central banks from the Global South are actively shifting their reserves towards gold at a much faster rate than advanced economies to reduce their exposure to the U.S. dollar amid growing trade protectionism. This shift is driven by concerns over the safe-haven status of the U.S. dollar and Treasury bonds, which have been raised by recent tariffs and trade policies. According to a survey by the World Gold Council, roughly every second central bank in the Global South plans to expand its gold reserves over the coming 12 months, with the U.S. dollar likely to be the currency most affected by this shift.

The Central Bank Gold Reserves Survey 2025 found that geopolitical instability and potential trade conflicts are the chief reasons why emerging economies are shifting towards gold at a much faster rate than advanced economies. The survey polled 15 central banks from advanced economies and 58 central banks from emerging markets and dynamic economies, with 95% expecting overall gold reserves to increase in the next 12 months. This trend helps explain why gold prices have touched $3,446 an ounce, close to its April record, while the U.S. dollar index is near three-year lows.

One anonymous central bank quoted in the report stated that the uncertainty stemming from the tariffs implemented and committed by the USA regarding trade policies in the recent period may reduce the interest in USD and USD-denominated assets as a reserve currency. Of all institutions polled, 48% of those in the Global South expected their own gold reserves to grow in the immediate future versus just 21% in advanced economies. Respondents argued that the de-dollarization trend that favors a shift to gold would continue due to increased tariffs and trade protectionism, but any decline would likely be gradual due to the U.S.’s deep financial markets, comparatively strong legal institutions, and the lack of any obvious substitute.

In 2024, central banks bought 1,045 metric tons of gold, accounting for about a fifth of global demand. This marked the third straight year during which they accumulated over 1,000 tons, up sharply from the 400-500 ton average over the preceding decade. According to the survey, 72% of all respondents believe gold reserves held by the world’s central banks will increase moderately over the next five years versus 66% the previous year. Another 4% of respondents, entirely coming from non-advanced economies, predict the gain will be even be significant, up 1 percentage point from before.

Central banks are expected to continue purchasing gold as they look for ways to reduce dependence on the U.S. dollar. The recent market developments around tariffs have raised questions on the safe-haven status of the U.S. dollar and Treasury bonds, but have bolstered that of gold. By comparison, 45% expect a moderate drop in U.S. dollar holdings over the same time period. While this represents an improvement over the 49% a year earlier, the number replying dollars would see a significant decline soared—to 28% from 13% previously.

The sharpest divergencies in responses between advanced economies and the Global South related to the trend of de-dollarization and how great a role geopolitical tensions play in fueling it. When asked how much of total global reserves would still be denominated in dollars five years from now, more central banks from non-advanced economies anticipated a slight decrease from the current 43% share than their peers in advanced economies. For comparison, gold accounted for only 19% of total reserves, with 15% allocated in euros and 2% in Chinese renminbi. Among those that expected no change in the share of dollar-denominated reserves, the relationship was flipped: far more advanced economies believed this to be the case than those elsewhere.

This trend resonates with the recent trend in reported central bank holdings, where a stronger appetite for gold accumulation from emerging markets and dynamic economies central banks is observed. The shift towards gold is seen as a way to reduce dependence on the U.S. dollar and to hedge against geopolitical risks and trade protectionism. The World Gold Council concluded that central banks are expected to continue purchasing gold as they look for ways to reduce dependence on the U.S. dollar, with the de-dollarization trend likely to continue in the coming years.