Deutsche Bank: The Foundation of US Dollar Reserves is Weakening, Gold Could Reach $8,000 in Five Years

Deutsche Bank's latest research report points out that the multiple underlying conditions that have long supported the US dollar's global reserve hegemony have fundamentally reversed. The unipolar geopolitical landscape, global liberal trade, and a long-term low-inflation environment are no longer the same, and the global monetary system is undergoing structural rebalance.

Dollar Reserve Share Continues to Shrink, Gold Becomes the Largest Receiving Asset

The global central bank foreign exchange reserve landscape has undergone a significant restructuring in recent years. The proportion of the US dollar in global reserves has fallen from a peak of over sixty percent to forty percent, while the proportion of gold reserves has nearly doubled in four years, approaching thirty percent, with the gap between the two shares narrowing continuously.

The share of reserves that the dollar has lost has not flowed to other mainstream fiat currencies but has instead poured into gold assets. Since the 2008 financial crisis, the cumulative scale of gold purchases by emerging market central banks has exceeded 225 million troy ounces, exceeding the total amount of gold sold by developed economies in the 1990s.

Deutsche Bank's calculations offer an imaginative outlook for gold prices. If emerging market central banks raise their target proportion of gold reserves to 40%, even if emerging market reserves are reduced to 5 trillion USD in the next five years, the international gold price is still expected to rise to 8000 USD per ounce within five years.

The Rise of Gold is Essentially a Historical Logical Regression

In the 1990s, after the United States established its global hegemony, low inflation, fiscal surplus, and high liquidity of US Treasuries continuously marginalized the reserve value of gold.

At that time, central banks from many European countries focused on reducing gold holdings and reached the related Central Bank Gold Agreements to coordinate the pace of reduction. The scale of emerging market foreign reserves expanded nearly nine times over decades, with asset allocation heavily dependent on the US dollar, further diluting the proportion of gold reserves.

Now the logic of the past has been completely reversed, and three forces are continuously supporting the gold market. Emerging market central banks actively allocate to gold, forming a positive cycle between central bank gold purchases and gold prices, coupled with the reserves entering a structural down cycle, the basis for gold to rise further is consolidated.

Defense Autonomy May Continue to Drive the Transfer of Dollar Reserves to Gold

Emerging markets have become the core force in the global reconfiguration of gold reserves. By the end of 2025, the proportion of gold holdings of emerging market central banks greatly increased compared to before the financial crisis, but the proportion of gold in their total reserves is still far lower than that of developed economies, and there is still ample space for subsequent increases.

The global gold purchase presents a pattern of multi-point blooming, with China, Russia, and India as the main holders, and medium powers such as Turkey and Saudi Arabia continue to increase their bets. After the Russia-Ukraine conflict, the proportion of gold increased significantly in many countries in Eastern Europe and the Middle East and North Africa in recent years.

Geopolitics and defense relations are deeply influencing the reserve allocation choices of various countries. Emerging markets with lower dependence on US defense and deeper cooperation with Russia and China have a significantly higher proportion of gold reserves than other economies. The future process of defense autonomy may continue to drive the transfer of dollar reserves to gold.

In 2022, the freezing of Russia's foreign exchange reserves became a key turning point for global central banks to reevaluate the risks of US dollar assets. Gold has the natural attributes of local storage, avoiding sanctions and asset freezes, becoming the core choice for emerging markets to diversify reserve risks.

The global economy has entered a new stage of low growth and high volatility, with persistent resilience in US inflation and increasing long-term concerns over fiscal and monetary policies. The bonus of globalization is fading, and the United States is shrinking its foreign strategy, gradually weakening the foundation of the traditional US dollar circulation system.

Regional powers have started to layout strategic autonomy, and the old model of outsourcing savings and security is no longer sustainable. Some Gulf countries have sought US dollar liquidity tools, and existing dollar reserves may be increasingly invested in domestic construction and defense development.

The actual purchasing strength of official gold may be underestimated by conventional data. The annual scale of official gold purchases, including sovereign wealth funds, far exceeds the statistical口径 of a single central bank. The potential push effect on gold prices has a stronger sustainability.

Gold Volume Surpasses US Treasury Bonds, New Currency Order Brewing Quietly

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