International News
Gold, ‘Non-traditional reserve currencies’ eat into U.S. dollar’s reserve dominance: Wolf Richter
Gold and other reserve currencies – but not the euro or renminbi – are steadily eroding the U.S. dollar’s position as the world’s preeminent reserve asset, according to Wolf Richter, analyst and publisher of Wolf Street.
“The status of the US dollar as the dominant global reserve currency has helped the US fund its twin deficits, and thereby has enabled them: the huge fiscal deficit every year and the massive trade deficit every year,” Richter wrote in an article published Monday. “The reserve currency status comes from other central banks (not the Fed) having purchased trillions of USD-denominated assets such as Treasury securities, other government securities, corporate bonds, and even stocks. The dollar status as the dominant reserve currency has been crucial for the US, and as that dominance declines ever so slowly, risks pile up ever so slowly.”
Total holdings of USD-denominated securities by other central banks (not the Fed) fell by $59 billion to $6.63 trillion at the end of 2024, from $6.69 trillion at the end of 2023,” he noted. “And the dollar’s share declined to 57.8% of total allocated exchange reserves at the end of 2024, the lowest since 1994, down by 7.3 percentage points in 10 years, as central banks have been diversifying their holdings for years to assets denominated in currencies other than the dollar, and into gold.”
International News
Gold Prices On Track To Reach $4,900/oz By End 2026 :Goldman Sachs
Goldman’s $4,900/oz Forecast Assumes Central Bank Demand Averages 50 Tonnes Per Month In 2026 and 40 Tonnes Per Month In 2027
Gold prices are on track to reach $4,900 per ounce by the end of 2026, driven by aggressive central bank purchases—led by undisclosed buying from China—and recovering exchange-traded fund (ETF) demand, Goldman Sachs said in a research note.
The bank maintained its bullish base-case target for bullion while warning that positioning in options markets could amplify price volatility in both directions. Central banks accumulated an estimated 44 tonnes of gold in July, well above the pre-2022 monthly average of 17 tonnes, according to Goldman Sachs’ nowcast model. On a three-month seasonally adjusted basis, central bank buying stood at 91 tonnes per month.
China was the primary driver, with Goldman estimating the People’s Bank of China bought 35 tonnes in July—roughly 75% more than official public disclosures indicated.
To account for unreported sovereign purchases, Goldman’s model tracks physical bullion flows through London’s over-the-counter (OTC) market into custodian vaults. The Bank of England’s central bank holdings alone rose by 63 tonnes in July, exceeding outflows from the Federal Reserve Bank of New York.
Price Risks and Volatility
Goldman’s $4,900/oz forecast assumes central bank demand averages 50 tonnes per month in 2026 and 40 tonnes per month in 2027, alongside steady Federal Reserve policy and a rebound in private ETF inflows.
However, analysts noted that elevated demand for gold call options—used by investors to hedge against macroeconomic and geopolitical risks—creates mechanical upside and downside risks:
Bullish Case: Continued strong ETF inflows combined with existing call option positioning could force options dealers to buy underlying metal to hedge short exposure, pushing prices “well above” $4,900.
Bearish Case: If the Federal Reserve resumes interest rate hikes, unwinding hedge positions and triggering ETF outflows, gold could drop to $4,440/oz by end-2026. Goldman noted that ongoing central bank buying would limit further downside.
Goldman expects the Federal Reserve to remain on hold through 2026 as inflation cools, removing a key interest rate headwind for the non-yielding asset.
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