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.”
Gold prices in the U.S. have moved back above $4,700 per ounce, with spot gold trading near $4,750 on Thursday, May 7, 2026. This marks a gain of over 1% in a single day, following its strongest rise in more than five weeks on Wednesday.
Although gold is still around 15% below its record high of nearly $5,595 per ounce, reached in January 2026, prices remain much higher than the $4,300–$4,400 support range seen during the market decline in late March.
Gold has been trading in a narrow range since the Iran conflict began in late February. During that period, prices dropped by more than 10% as rising oil prices increased inflation concerns, forcing the U.S. Federal Reserve to keep interest rates unchanged and pushing Treasury yields higher.
Now, market conditions are changing. Oil prices are easing, bond yields are falling, and investors are returning to gold, making it more attractive again.
Three main factors are supporting the recent rise in gold prices:
1. Falling U.S. Treasury yields:
The yield on the 10-year U.S. Treasury bond has dropped from around 4.4%, reducing the cost of holding gold. Since gold does not pay interest, lower bond yields make it a more attractive investment.
2. A weaker U.S. dollar:
A softer dollar generally helps gold prices, as it makes gold cheaper for buyers using other currencies.
3. Optimism over U.S.–Iran talks:
Renewed hopes of diplomacy between the U.S. and Iran have improved market sentiment, adding support to gold prices.
With Treasury yields easing and inflation fears cooling, one of the biggest pressures on gold since March is beginning to fade.
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