Is Gold Replacing the Dollar? What NY Fed Research Says

What the New York Fed Research Actually Says

In May 2024, economists at the Federal Reserve Bank of New York published a Liberty Street Economics post (29 May 2024) examining “declining dollar shares in official reserves, and increasing roles for gold holdings by central banks.” The authors concluded that these narratives “inappropriately generalize the actions of a small group of countries.” The post reflects the authors’ views, not an official position of the New York Fed or the Federal Reserve System.

The post notes that “global central banks and finance ministries held nearly $12 trillion of foreign exchange reserves as of the end of 2023, with nearly $7 trillion composed of U.S. dollar assets.” Citing World Gold Council data, the authors add that “global central banks purchased over 1,100 tons of gold in 2022 - more than double the purchase amounts of the previous year - and maintained a similar purchase level in 2023.”

The same research found that “more than half of reported gold accumulation since 2009 was from China and Russia, with another quarter coming from a handful of emerging market central banks (Turkey, India, Kazakhstan, Uzbekistan, and Thailand),” and that gold’s share of aggregate reserves remains about 10 percent (15 percent at market valuation), roughly its early-2000s level. The rest of this section is the author’s opinion, not investment advice. The data can still be read as a sign that a meaningful group of countries is moving toward gold. In our view, that shift is worth watching even if, as the authors argue, it is concentrated in a small number of large reserve holders rather than a broad move away from the dollar.