Central Banks Reduce Dollar Holdings and Boost Gold Amid Rising Geopolitical Risk

A survey conducted by the Official Monetary and Financial Institutions Forum (OMFIF) between March and May 2026, with responses from 74 central banks, shows that for the first time more institutions plan to lower their dollar holdings than increase them over the next decade. The same survey records a record-high intention among central banks to raise gold investments, even as gold prices have risen more than 20 % in the past year.

CNN

The shift occurs against a backdrop of heightened geopolitical risk. A Middle-East war, described as “partly started by the United States,” and President Donald Trump’s pursuit of new tariffs have amplified concerns about the stability of the U.S. political environment. According to JPMorgan, the share of U.S. dollars in central-bank reserves fell to a two-decade low last year, underscoring a broader “de-dollarization” trend that seeks to reduce reliance on the greenback in global trade and finance.

CNN

• OMFIF – independent research group that designed and released the survey.

CNN

• Andrea Correa – head of research at OMFIF, who noted that the dollar has remained around 58 % of central-bank portfolios for five years.

CNN

• Karsten Stroborn – director general of markets at Germany’s central bank, who highlighted the euro’s growing role in international debt and green bonds.

CNN

• 74 central banks – respondents indicating intentions to adjust currency and gold allocations.

CNN

• Dollar outlook: Intent to cut dollar holdings now exceeds intent to increase them; the dollar still accounts for roughly 58 % of reserves.

CNN

• Euro interest: 29 % of banks plan to raise euro holdings (up from 22 % last year); euro-denominated debt hit a record in 2025 and the euro leads the green-bond market.

CNN

• Renminbi appeal: Two-thirds of banks view the Chinese currency as a diversification tool.

CNN

• Alternative currencies: Growing demand for the Singapore dollar, South Korean won, and South African rand.

CNN

• Gold demand: 51 % of banks intend to increase gold holdings, an 11-point rise from 2024, driven by protection against geopolitical risk.

CNN

A sustained move away from the dollar could dampen demand for the greenback, potentially affecting its exchange rate and the United States’ financing costs. Simultaneously, the euro and renminbi may gain traction in trade invoicing and sovereign debt issuance. Gold’s elevated status as a hedge signals heightened uncertainty about the international monetary system, which could reshape reserve-management strategies worldwide.

CNN

OMFIF’s report states that geopolitics now outweighs U.S. domestic politics in discouraging dollar investment, while also acknowledging the dollar’s continued dominance in portfolios. The organization attributes the gold surge to “protection against geopolitical risk and growing doubts about the stability of the international monetary system.” Andrea Correa emphasized the dollar’s 58 % share, and Karsten Stroborn pointed to the euro’s record debt issuance and leadership in green bonds as evidence of its rising attractiveness.

CNN

Despite the reported intentions, OMFIF cautions that the dollar “still dominates portfolios and is expected to do so for the foreseeable future,” suggesting that de-dollarization will be gradual rather than abrupt.

CNN

• “This year, geopolitics has overtaken the US political environment in discouraging investment in the dollar, reflecting the perceived role of the US in elevating geopolitical risk,” — OMFIF, Official Monetary and Financial Institutions Forum

CNN

• “still dominates portfolios and is expected to do so for the foreseeable future.” — OMFIF, Official Monetary and Financial Institutions Forum

CNN

• “Gold “has moved to the centre” of strategies to manage countries’ asset pools, it added.” — OMFIF, Official Monetary and Financial Institutions Forum

CNN

• “driven by protection against geopolitical risk and growing doubts about the stability of the international monetary system,” — OMFIF, Official Monetary and Financial Institutions Forum

CNN

Central banks will continue to recalibrate their reserve compositions over the coming decade, with further increases in gold and alternative currencies likely if geopolitical tensions persist. OMFIF plans to update its survey annually, providing ongoing insight into the evolving balance between the dollar, other sovereign currencies, and precious metals.

CNN