Trump's policies, sanctions turn central banks to gold, drive de-dollarisation, Pg11

Key Highlights:

• Gold prices surpassed $5,000 per ounce in January 2026, driven by central bank demand and de-dollarization trends.
• The Reserve Bank of India (RBI) saw a significant increase in foreign exchange reserves, with gold holdings contributing substantially to the rise.
• Central banks like Poland, Kazakhstan, and Brazil were major gold buyers in 2025.
• The US dollar weakened by 9% in 2025, influenced by Trump's policies and geopolitical tensions.

Detailed Insights:

• Trump's policies on trade and sanctions are accelerating the shift away from the US dollar towards a multipolar world.
• The RBI has decreased its holdings of US government bonds, mirroring a trend seen in other countries like China.
• Some European pension funds are divesting from US Treasuries, citing concerns over US government finances and policy decisions.
• The weaponization of capital flows, highlighted by Deutsche Bank, suggests potential for further de-dollarization if tensions escalate.
• The share of the US dollar in global forex reserves fell to a 30-year low of 58.5% in 2024, down from 71% in 1999.
• De-dollarization could impact the US's ability to exert economic pressure and fund its military operations globally.
• Despite the shift, the US dollar remains dominant, accounting for 89% of total turnover in foreign exchange.

Key Concepts Involved:

• De-dollarization: The process of reducing the US dollar's dominance in international trade, finance, and reserves.
• Forex Reserves: Assets held by a central bank in foreign currencies, gold, and other reserve assets.
• Weaponization of Capital Flows: Using financial measures, such as sanctions or investment restrictions, to achieve geopolitical goals.