The Zhitong Finance App learned that according to the latest disclosure research report of the Federal Reserve Bank of New York (NY Fed), one of the 12 local federal banks under the Federal Reserve system, the decline in the share of US dollar currency reserves in global foreign exchange reserves does not reflect that reserve assets are generally completely shifting from US dollar currencies to other currencies or gold reserves, but rather the result of a few reserve managers such as the Bank of Russia taking the initiative to withdraw from US dollar reserves.
At the same time, the New York Federal Reserve has cooled down the “full de-dollarization” narrative, yet it has not overturned the positive allocation value of gold assets. The share of the US dollar in the world's official foreign exchange reserves fell from 64% in 2015 to about 56% in 2025, a decrease of 8 percentage points. However, the New York Federal Reserve research found that in the two research stages since 2015, the number of countries that raised and lowered the US dollar allocation ratio was roughly equivalent to that of a few large reserve managers.
Among them, the contributions of China, Russia, Mexico, and Morocco from 2019 to 2023 include estimates based on data gaps. To a certain extent, this shows that the share of the US dollar in global foreign exchange reserves has declined, and cannot be directly understood as the general withdrawal of the US dollar by major central banks around the world.
Last year, US dollar holdings represented 56% of official foreign exchange reserves, compared to 64% ten years ago. Although this change is often cited as evidence of widespread de-dollarization, senior researchers within the Federal Reserve system said their research found that the number of countries that increased and decreased their dollar holdings in the two different periods since 2015 was roughly equal.
As far as the long-term allocation value of gold is concerned, US fiscal pressure provides an important basis for the gold credit risk hedging logic. A Bloomberg Intelligence interview with global asset managers showed that the expansion of fiscal deficits and the expansion of the Treasury's buyback have reactivated transactions using assets such as gold to hedge financial credit risk.
New York Federal Reserve: The extent to which global reserves are being transferred out of the dollar has been exaggerated
“There is little evidence that the official sector is generally reducing exposure to the dollar currency through decentralized allocations,” Linda S. Goldberg and Sneha Partasarati wrote in a Federal Reserve research article last week. “Aggregated statistics may misjudge overall trends, and these data actually reflect only the actions taken by a few large reserve management players.”
Research by the New York Federal Reserve shows that between 2015 and 2019, actions to actively reduce the dollar allocation mainly came from China and Russia; from 2019 to 2023, most of the decline in the dollar share was driven by China, Russia, Mexico, and Morocco.
Federal Reserve researchers said that adjustments in other countries mainly reflect countries' own specific needs, including obtaining liquidity from the US dollar, interfering with and managing exchange rates, and preventing financing shocks.
“These drivers are still strong,” they added. “The channel of changes in reserve size reflects that different countries have taken unique foreign exchange management actions at different times in response to their unique reserve management needs, rather than systematically circumventing the US dollar.”
According to data released by the International Monetary Fund in January, the share of US dollars in foreign central bank reserves fell to its lowest level since 1995, but this decline was due to the depreciation of the US dollar rather than a reduction in holdings. However, according to another study released in June, most central banks around the world plan to reduce their exposure to the US dollar over the long term.
Recently, Wall Street financial giants are collectively bullish on the core logic of gold. Basically, they focus on paying more attention to diversifying reserves and hedging the value of investment portfolios, and concerns about the US government's fiscal credit are the primary supporting factors for these two major logics. The New York Federal Reserve has cooled down the “full de-dollarization” narrative, yet it has not overturned the allocation value of gold.
The US Congressional Budget Office predicted in February this year that the federal budget deficit will expand from about 1.9 trillion US dollars in fiscal 2026 to about 3.1 trillion US dollars in fiscal year 2036, and that the share of federal debt held by the public in GDP will rise from 101% to 120% during the same period. Continued increases in bond supply, inflationary uncertainty, and fiscal sustainability concerns may all push up the maturity premium required by investors to hold long-term treasury bonds. Therefore, the rise in long-term bond yields may reflect both expectations of interest rate hikes and investors' demand for higher fiscal risk compensation, and the latter is the core logic of the recent rise in the gold allocation ratio of global institutions, including central banks.
Furthermore, the US Treasury has expanded its support for the long-term bond market: According to the August 19 announcement, starting from September 9, the upper limit for single liquidity support repurchases of old nominal treasury bonds in the 10-20 and 20-30 ranges will be raised from 2 billion US dollars to at least 4 billion US dollars. This arrangement helps improve market liquidity, but it does not amount to quantitative easing by the Federal Reserve, nor will it eliminate the fiscal deficit.
The return of gold “reinforcements”: fiscal credit hedging and energy cooling, opening two upward paths
What both Societe Generale and Deutsche Bank are concerned about is that the gold buying structure is improving. After reducing its holdings in the first half of the year, France Xing is once again bullish, believing that the impact of previous hawkish expectations has been fully absorbed, and that the central bank's concerns about gold purchases, geographical risk, and sovereign debt are supporting the long-term allocation value of gold. Deutsche Bank's judgment on September 3 focused more on capital flow: commercial and retail sales weakened, and discretionary hedge funds, asset managers, and banks began relaying purchases, but these investors' positions were still low. They both point to an opportunity, right? Against the backdrop of an increasing imbalance in US fiscal credit, institutional positions may create continued demand rather than simply relying on sudden risk aversion.
The actual allocation of asset management giants has already been followed up. Amundi bought gold during the pullback period and expects the gold price to return to $5,000 by the end of 2026; Pictet, Robeco, and Fidelity International have also made up for previously reduced gold positions. Official demand also showed quarterly improvements: according to World Gold Council data, the central bank's net purchases in the second quarter were 288.9 tons, a year-on-year increase of 62%, the highest level in the second quarter of the year; however, due to the weakness of the first quarter, cumulative purchases in the first half of the year were still low in the same period since 2022, providing important logical support for the resurgence of gold buying.
Another upward path offered by Citi is energy cooling after the situation in the Middle East eases. Based on the scenario where the Strait of Hormuz will resume navigation in the fourth quarter of 2026, the bank expects the quarterly price of Brent crude oil to drop from 86 US dollars/barrel in the third quarter to 70 US dollars/barrel in the fourth quarter, and further to 65 US dollars/barrel in 2027. Falling energy costs may ease financial and external balance pressure on emerging markets and release demand for physical purchases; if policy expectations are loosened and the dollar and real interest rates fall, gold holding costs will also decrease. However, Citi emphasized that falling oil prices alone do not guarantee a decline in real interest rates, and how to respond to monetary policy and PCE inflation data is still the key. Using $4,500 as a comparison benchmark, Citi's targets of $4,800 and $5,000 correspond to about 6.7% and 11.1% growth space, respectively.
Dalio, founder of the Bridgewater Fund, recently issued another warning about the US financial situation. He believes that US Treasury Secretary Bessent's announcement to expand long-term treasury bond repurchases, combined with phenomena such as the sharp rise in long-term US bond yields and Japan's reduction in exposure to the US bond market, may mean that the US treasury is nearing a critical turning point; if the debt problem is not dealt with in a timely manner, the US may face a more serious debt crisis in the next few years, and Dalio suggests investors increase their gold holdings.
The “Bull & Bear Indicator” (Bull & Bear Indicator), compiled exclusively by Bank of America, has risen to 9.5 and is in the “sale” range, so the Bank of America strategy team framework led by Bank of America senior strategist Michael Hartnett, who has the title of “Wall Street's Most Valid Strategist,” advocates the use of gold to hedge dollar credit dilution, expand the commodities and natural resources needed for AI construction, and be wary of highly leveraged hyperscale cloud vendors, private credit, and cyclical financial assets.
The “niche market” paradox of gold is the most explosive part of this long-term bullish logic: although the total value of gold on the ground exceeds 30 trillion US dollars, and the average daily transaction volume exceeds 300 billion US dollars, large stocks belong to central bank reserves, jewelry, and long-term holdings. The huge transactions in the London market also mainly come from repeated exchanges between banks, market makers, and algorithmic transactions. The free circulation market that can actually absorb new long-term capital is far less than the nominal market value. Goldman Sachs statistics show that gold exchange-traded funds (or gold ETFs) only accounted for 0.17% of the US private finance portfolio in December last year; strictly speaking, for every 0.01 percentage point, or 1 basis point increase in the share of gold assets allocated by institutions or retail investors under any logic, the gold price estimated by the Goldman Sachs model increased by about 1.4%.