FPJ News Service mumbai

The dollar is the only currency where net demand has fallen among central banks this year. This is attributable to rising concerns about the US political environment, highlighted by 70% of respondents, up from 31% last year, as well as geopolitics and US fiscal risks. The caution extends to global public funds–more than half think that US market exceptionalism will end, according to a survey by the Official Monetary and Financial Institutions Forum.

Gold is appearing as the main alternative to dollars. Following several years of purchases at or close to record highs, 32% of central banks expect to increase their holdings of the precious metal in the next 12-24 months. A net 40% plan to purchase gold over the next 10 years – higher than for any other asset class. Diversification and protection against geopolitical risk are cited as the primary motivations for this decision.

Against this backdrop, survey respondents are bullish on the gold market. The vast majority of central banks and public funds respondents expect the gold price to remain above $3,000 per ounce over the next year, with over 20% anticipating a record high of above $3,500 per ounce.

Based on a survey of 75 central banks, shows the appetite for diversification continues. But for very different reasons. The foundations of the global economic order, underpinned by globalisation and the dollar, are shaking. Protectionism, geopolitical tensions and volatile policy-making are becoming norms. In this environment, close to 60% of surveyed central banks are seeking to diversify their portfolios within the next two years.