Gold is marching ahead like an emperor. The financial world is witness to the full fury of gold’s dominance after several decades.
The bull run for the Emperor of Assets, gold, began in late 2022 and has since crushed the Euro and US Treasuries.
How? Gold’s share in central banks’ foreign exchange reserves stands at 20%, surpassing 16% of Euro holdings. Dollar holdings remain at 46%, the highest but steadily declining.
After the Euro, gold has gotten the better of US treasuries.
For the first time since 1996, global central banks’ foreign exchange holdings in gold now exceed their holdings of US Treasuries.
But, how does it impact gold prices?
The impact is two-fold. One, it shows the falling dominance of the dollar, and second, the central bank’s higher level of trust in the bullion.
If this trend continues, gold prices could see much higher levels.
Gold Price…Now and Future
Gold currently trades around $3,592, an all-time high level never seen before in history. In the past 24 months, gold has doubled. A reversal doesn’t look likely as prices are already up over 36% so far this year.
So, how high can the gold price move from here?
Here’s what a Goldman Sachs report says — If only 1% of funds in the privately held U.S. Treasury market flow into gold, the price of gold can touch $5,000. That’s another 43% jump from the current level!
But is the US Treasury market so big that a small percentage of funds can influence gold prices? The US Treasury market is nearly $30 trillion, of which 71% is held domestically, with much of domestic and foreign ownership held by the private sector.
Even ICICI Bank has set a solid target for gold in its recent report. Gold price today in India is Rs 1,07,920, an all-time high for Indian gold buyers. ICICI Bank expects gold to move higher to Rs 1,25,000 in the first half of 2026.
Trust in Gold
Central banks have been one of the largest buyers of gold for the last 3 years. And they continue to buy. The trust central banks have shown in gold in the recent past is overwhelming.
For the last 3 years — 2022, 2023 and 2024 — central banks have bought over 1,000 tonnes of gold in each year. The annual average before that was hardly 500 tonnes.
Falling Trust in Dollar
The question that comes up is, why will central banks and private individuals holding US Treasury bonds find solace in gold?
It’s the trust factor with a capital T in the safe-haven asset class, gold.
The overall trust for financial institutions seems to be eroding, and the US dollar is finding itself in the firing line. The US dollar has declined by nearly 10% this year.
The US dollar is the most widely used reserve currency in the world. However, according to the IMF, its influence is steadily waning due to the rising US debt burden and rising questions about the US Federal Reserve’s independence.
Peter Schiff, Chief Economist & Global Strategist at Europac and Chairman of SchiffGold, expressed his concerns in an X post saying, the prospect of the Supreme Court potentially undermining the Federal Reserve’s independence is the primary driver for rising gold and bond yields.
The loss of trust in fiat currencies printed by global central banks is driving gold’s domination over other assets and currencies.
Going Forward
The US job market is losing ground fast, and US Fed rate cuts are looking imminent, which could boost the gold price further.
Also, if the tariff-led trade war escalates, it could threaten the dollar’s trade dominance, leading to de-dollarization and an altogether different world where gold may rule the roost.
Sit tight and ride the wave until the factors leading to the bull run change. And the emperor calls it a day.