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Gold, ‘Non-traditional reserve currencies’ eat into U.S. dollar’s reserve dominance: Wolf Richter

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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.”

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International News

Gold continues upward march;Bank of America forecasts  $5,000/oz for 2026

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Gold prices in India saw a modest rise on Wednesday today Oct 15, mirroring an uptick in international markets as renewed US-China trade tensions and expectations of further US interest rate cuts bolstered demand for safe-haven assets.24k gold traded at Rs.1,28,360/10gm after gaining ₹10 in early trade, while silver prices increased by Rs.100 to Rs.1,89,100 per kilogram.

Gold prices surged to a record high of $4,179.48 per ounce on October 14, 2025.  Investors flocked to safe-haven metals amid trade tensions and Fed rate-cut expectations. U.S. December gold futures jumped 57% year-to-date.  Bank of America raised its 2026 gold forecast to $5,000 per ounce, warning of possible near-term corrections.

Gold prices soared to an unprecedented $4,179.48 per ounce on October 14, 2025, marking a historic milestone for the yellow metal. The rally comes as investors worldwide seek safety in hard assets amid a turbulent global economic backdrop marked by escalating trade tensions, slowing growth, and expectations of further interest rate cuts by the U.S. Federal Reserve.

The sharp surge in bullion prices has been driven by a combination of macroeconomic uncertainty and aggressive monetary easing. As inflation pressures remain sticky and central banks pivot toward dovish policies, gold has reasserted its role as a hedge against both currency debasement and market volatility.

In futures trading, U.S. December gold contracts have skyrocketed nearly 57% so far this year, underscoring the strength of investor demand across both institutional and retail segments. Analysts note that central bank buying—particularly from emerging markets—has added further momentum to the rally, with several countries diversifying reserves away from the U.S. dollar.

Reflecting this bullish sentiment, Bank of America has raised its 2026 gold price forecast to $5,000 per ounce, citing continued monetary easing, geopolitical instability, and robust central bank accumulation. However, the bank also cautioned that short-term corrections are likely, given the rapid pace of the recent run-up and potential bouts of profit-taking.

Overall, gold’s meteoric rise underscores a broader shift toward safe-haven assets, as investors navigate a world increasingly defined by economic fragmentation, shifting interest rate cycles, and persistent geopolitical risks.

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