Central banks plan dollar sell off, gold buying spree

Central banks are, for the first time on record, planning to cut their dollar holdings faster than they plan to add to them, a shift that marks a turning point in how the world's reserve managers view the greenback's political risk. That finding comes from a survey of 74 central banks conducted between March and May 2025 by the Official Monetary and Financial Institutions Forum (OMFIF), a London based research group.

At a Glance

• 74 central banks surveyed by OMFIF between March and May 2025 show more plan to cut dollar allocations than increase them, a first since the survey began in 2023.
• The dollar's share of global foreign exchange reserves has held near 58% over the past five years, but fell to a two decade low last year, according to JPMorgan.
• Nearly all respondents see diversification value in the renminbi, while two thirds now view the euro as more attractive for trade, up from 43% a year earlier.
• 29% of central banks want to raise euro holdings long term, up from 22% in the prior survey.
• Interest is also building in alternative currencies such as the Singapore dollar, South Korean won and South African rand.

What the Survey Actually Measures

OMFIF has tracked central bank investment intentions since 2023, and this is the first year the balance has tipped toward net reduction rather than net accumulation of dollar reserves. The timing lines up with two distinct sources of instability: a Middle East war that the United States helped trigger, which rattled global energy markets, and President Trump's continued push to use tariffs as a primary tool of economic policy. Both developments feed into what OMFIF calls a rise in perceived geopolitical risk tied directly to US policy choices, not just market fundamentals.

The report is explicit on this point: geopolitics, rather than domestic US political dynamics, is now the dominant factor discouraging further dollar investment. That is a meaningful distinction for anyone parsing reserve manager behavior, because it suggests central banks are pricing in the risk that US foreign policy actions, sanctions regimes, or trade measures could complicate dollar denominated holdings, independent of what happens with US fiscal or monetary policy domestically.

The Numbers Behind