Central Banks Boost Gold Reserves to Diversify from the Dollar

Global central banks are increasingly turning to gold as a means to diversify away from the US dollar amid concerns over persistently large fiscal deficits and the potential for inflation. Gold prices have surged to 50-year highs against three-quarters of major currencies, indicating strong demand from central banks.
While ETF holdings of gold have been falling, official sector purchases, including those from China, Germany, and Turkey, have been on the rise. Central banks view gold as a hard asset that is not part of the financialized system, offering a hedge against the risks associated with holding too many dollars. This trend suggests that while investors in gold ETFs may not be overly worried about inflation or the dollar, central banks are signaling the opposite.