A CareEdge report highlights gold’s resurgence as a principal reserve asset, showing a major shift in the global financial system. Driven by fiscal risks, inflation, and geopolitical tensions, central banks are diversifying away from the US dollar.
The resurgence of gold as a principal reserve asset highlights a major transformation in the global financial system, according to a report by CareEdge Ratings. As per the report, the growing demand for gold reflects the rising fiscal vulnerabilities, persistent inflationary pressures, and geopolitical uncertainties shaping the world economy.
It stated, “Resurgence of gold as a principal reserve asset underscores a profound transformation in the global financial architecture.”
The report shared that as traditional anchors such as the U.S. dollar and the Euro face growing scrutiny due to sovereign risks and structural weaknesses, gold has re-emerged as a politically neutral and inflation-resistant store of value.
Central banks across the world, especially those within the BRICS bloc, are now recalibrating their reserve strategies. They are reducing their over-reliance on dollar-denominated assets and moving towards a more diversified and resilient portfolio that prominently includes gold.
This strategic shift indicates not only a desire for monetary autonomy but also an effort to build protection against external shocks. It also reflects a broader rebalancing of global economic influence.
Gold prices have seen a sharp surge in recent months. The yellow metal rose to an average of USD 3,665 per ounce in September 2025, nearly doubling in value from two years ago.
In October, it touched a record high of USD 4,000 per ounce. From January 2024 to mid-2025, gold prices increased by nearly 64 per cent, supported by strong investor sentiment and central bank purchases.
The report also noted that the share of dollar holdings in central banks’ foreign exchange reserves has been steadily declining for over two decades. It fell from 71.1 per cent in 2000 to 57.8 per cent in 2024, showing a gradual shift away from the dollar.
Central banks have been actively diversifying their portfolios, reducing exposure to dollar-denominated assets and adding more gold as a strategic alternative.
In India, gold imports in September 2025 reached a ten-month high, marking the third consecutive month of increase. The imports also surpassed the five-year monthly average. This rise points to strong domestic demand during the festive season, despite the persistently high gold prices.
CareEdge Ratings said that gold’s renewed appeal is not just as a commodity but as a key strategic reserve asset amid a changing global financial landscape.
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