Gold prices are trading near $4,500, and Deutsche Bank has predicted the XAU/USD index could surge past $8,000 due to accelerating de-dollarization. In a client note, the bank stated that emerging economies are increasingly sidelining the US dollar by purchasing gold for their central bank reserves, a growing trend that could alter the global financial landscape. Major buyers include China, Russia, India, Poland, and Turkey, seeking a financial safety net against potential sanctions.
Deutsche Bank has forecast that gold prices could exceed $8,000 as de-dollarization gains momentum. The bank wrote in a note to clients that emerging economies are diversifying reserves by procuring gold and sidelining the US dollar.
This trend is a cause for concern as it is growing and could change the global financial landscape. Developing countries have added over 225 million troy ounces of gold since 2008, according to the bank’s analysis.
Countries such as China, Russia, India, Poland, and Turkey remain the biggest buyers of gold. This adds a layer of financial safety net to protect their economies from being vulnerable to sanctions.
Saudi Arabia, Qatar, the United Arab Emirates, Egypt, and Kazakhstan are also significant accumulators. Countries in Eastern Europe and the Middle East are significantly increasing their gold reserves as de-dollarization expands, Deutsche Bank emphasized.
The accumulation rose dramatically after the US imposed sanctions on Russia in February 2022. Developing countries are now buying more gold than the Western bloc combined.
This rising allocation is making de-dollarization advance at a rapid pace. In the next five years, the allocation would increase further, leading to a strain on the US dollar’s prospects.
The future of de-dollarization will depend on how high the gold spending would reach. If central banks begin to target 40% of their reserves in gold, then the US dollar would fall on the path of decline.
There is growing mistrust of the US dollar lately due to previous trade wars and tariffs. The imposing of sanctions was already a concern for developing nations.
