Central Banks Turn to Gold as Hedge Against U.S. Dollar Dominance

Amid geopolitical tensions and a reevaluation of economic partnerships, central banks are significantly increasing their gold purchases, viewing the metal as a stable, politically neutral asset. This trend, highlighted by IMF Deputy Managing Director Gita Gopinath, reflects a shift away from heavy reliance on the U.S. dollar due to its increasing use as a geopolitical tool. The World Gold Council reports that central banks have bought over 1,000 tons of gold annually in 2022 and 2023, making up a quarter of the total gold demand, underscoring gold’s role as a hedge in a fragmenting global economic order.