Gold is reclaiming its former prominence. A recent research report from Deutsche Bank AG this week points out that the conditions which drove the establishment of the US dollar's reserve status in the 1990s—unipolar hegemony, expansion of free trade, economic stability, and low inflation—have quietly reversed. The dollar's share in global central bank reserves has plummeted from a peak of over 60% to 40%, while the share of gold has nearly doubled over the past four years, climbing to nearly 30%. The gap between the two has narrowed to just 10 percentage points.
Deutsche Bank AG believes the dollar's lost share has not shifted to other fiat currencies but has almost entirely flowed into gold. Since the 2008 financial crisis, central banks in emerging markets have cumulatively purchased over 225 million troy ounces of gold, exceeding the total amount sold by developed economies during the 1990s. In its simulation, Deutsche Bank AG suggests that if emerging market central banks were to raise their target gold allocation to 40%, the price of gold could still reach $8,000 per ounce over the next five years, even if their total foreign exchange reserves were to contract to $5 trillion. A more profound implication is that the physical gold accumulated by emerging markets may be a prelude to a future monetary order independent of the dollar system.
The Return of History: Gold Gains as the Dollar Recedes
Deutsche Bank AG defines the current situation as a "return of history," signifying a reversal of the "end of history" proclaimed by historian Francis Fukuyama in 1989. At that time, the United States established its undisputed global dominance, trade globalization expanded rapidly, central banks in developed economies sold off gold competitively, while emerging markets massively accumulated dollar-denominated foreign exchange reserves. Deutsche Bank AG notes that the decline in gold's share of global central bank reserves did not occur with the collapse of the Bretton Woods system in 1971 but stemmed from the full establishment of US hegemony following the fall of the Berlin Wall in the 1990s. During that period, controlled US inflation, fiscal surpluses, a mature independent central bank system, and the liquidity and positive yield of US Treasuries made them highly attractive compared to zero-yield gold, which also carries storage costs. Central banks in several European countries, including Switzerland, the UK, Belgium, the Netherlands, and Austria, sold off gold and reached the Central Bank Gold Agreement in 1999 to coordinate reductions. Meanwhile, emerging market foreign exchange reserves grew approximately ninefold between 1990 and 2007, with the vast majority stored in dollars, significantly diluting the relative share of gold. Now, this logic is running in reverse. The report identifies three core driving factors:
Active gold accumulation by emerging market central banks; Central bank purchases driving up gold prices, creating a positive feedback loop; And the potential for a structural decline in the scale of emerging market foreign exchange reserves.
The confluence of these three forces suggests significant upside potential for gold remains.
Emerging Markets: The Core of Gold Accumulation and Reserve Restructuring
Emerging markets are the absolute core of the current global gold reserve restructuring. Data shows that by the end of 2025, emerging market central banks held 367 million troy ounces of physical gold, while developed economy central banks held 712 million troy ounces. The former is about 52% of the latter, a ratio that was approximately 20% before the 2008 financial crisis.
The disparity is even more pronounced when looking at gold as a percentage of total reserves. By the end of 2025, gold constituted 34% of total reserves for developed economy central banks but only 16% for emerging market central banks. The report suggests this gap indicates substantial room for further accumulation by emerging markets.
Notable is the regional distribution and accelerating pace of gold purchases. Although nearly half of emerging market central bank gold holdings are concentrated in China, Russia, and India, mid-sized powers like Turkey, Kazakhstan, and Saudi Arabia are also significant holders.
Even more noteworthy are the regions of Eastern Europe and the Middle East & North Africa (MENA): Since the Russia-Ukraine conflict, over half of the gold reserves of the Czech Republic and Poland were acquired in the past four years; MENA countries like Qatar, Egypt, and the UAE have also acquired 25% to 50% of their total holdings in recent years.
Deutsche Bank AG's research also reveals a geopolitical pattern. Emerging market countries more closely tied to Western defense systems have a lower gold reserve share, while those with deeper defense ties to China and Russia have a significantly higher gold share. Analysis based on SIPRI arms import data shows that emerging market countries importing over one-third of their arms from the "Eastern bloc" (China and Russia) hold twice the gold share in their reserves as countries with low defense linkages. The report infers that if more countries diversify their defense dependence away from the US, it would logically correspond to a decline in dollar reserves and a rise in gold reserves.
Geopolitics Reshaping Reserve Logic: The Impact of Dollar Weaponization
Deutsche Bank AG views the 2022 freezing of approximately $300 billion of Russian foreign exchange reserves by Western nations as a watershed moment accelerating global central banks' reassessment of dollar reserve risks. Physical gold can be stored domestically, unaffected by sanctions or asset freezes—a key consideration for emerging market central banks. Both Russia and China store all their gold reserves within their own borders. From a broader framework, the era of the "Great Moderation" has ended. US inflation has persistently exceeded its target over the past five years, raising questions about monetary policy independence, and its fiscal trajectory is causing market concern. The report also notes the US is stepping back from free trade and traditional alliance systems. The past logic was: the US was willing to accept manufacturing outsourcing to emerging markets, while emerging markets were willing to outsource security and savings to the US. This dynamic is reversing. Countries in Asia and the Gulf region are increasingly focusing on strategic autonomy in energy and defense, which may require using previously accumulated dollar reserves to build their own capabilities. The report cites reports that the UAE has applied to the US Treasury for a currency swap arrangement, indicating emerging demand for dollar liquidity, and that Gulf savings may be mobilized for post-war reconstruction and domestic defense spending.
Gold Price Scenario Simulation: Potential to Reach $8,000 Within Five Years
Deutsche Bank AG assumes that for every 1 million troy ounces of gold purchased by emerging market central banks, the gold price rises by approximately 1%.
Based on this, the report calculates gold price trajectories under different scenarios. In the most baseline scenario, if emerging market foreign exchange reserves remain at the current level of about $8 trillion and central banks set a target gold allocation of 40%, the gold price would be significantly higher than current levels.
Even if emerging market foreign exchange reserves contract to $5 trillion, if central banks simultaneously pursue gold purchases to raise the gold share to 40%, the gold price could still rise to approximately $8,000 per ounce. The specific logic is: with $5 trillion in foreign exchange reserves, gold would need to reach a market value of about $3.3 trillion to achieve the 40% allocation target.
At the current central bank purchase rate of about 10 million troy ounces per year (based on IMF data), an additional purchase of about 52 million ounces would push the gold price to approximately $7,977, corresponding to a five-year purchase pace. The only extreme scenario for price decline assumes a severe contraction of emerging market foreign exchange reserves to $2.5 trillion. In that case, the gold stock held by emerging market central banks at current prices (about $1.7 trillion) would already be close to the 40% target allocation, leaving little incentive for additional purchases and thus eliminating upward price potential. Furthermore, the report specifically notes that official gold purchase data tracked by the World Gold Council, which includes sovereign wealth funds, shows annual purchases of over 3,000 tonnes—three times the figure indicated by IMF central bank data.
This suggests actual official buying pressure may far exceed commonly cited numbers, with a correspondingly amplified potential impact on gold prices.
Gold and the Future Monetary Order: Possibilities Beyond the Dollar
Deutsche Bank AG further analyzes whether the physical gold accumulated by emerging markets signals a brewing alternative monetary order independent of the dollar system. The report points out that the historical alternation between fiat currencies and asset-backed currencies is not accidental; cycles in financial orders are the norm. At the inception of the Bretton Woods system, the US backed the dollar's credibility with its gold reserves, which comprised over 70% of the global total. The report argues that if other countries seek to enhance their currencies' international status, turning to gold backing holds inherent logic. Gold has a monetary history spanning over 2,500 years, is not a liability of any single country, and its above-ground stock grows at about 2% annually, slower than the expansion rate of most national fiscal deficits. This gives it unique anchoring value in an environment of questionable fiscal discipline. According to research by the independent think tank OMFIF, BRICS nations are exploring the creation of a common currency partially linked to gold and partially to member currencies. According to media reports from late 2025, a "BRICS Unit" backed by a basket of 40% physical gold and 60% an equal mix of BRICS fiat currencies has entered a pilot phase. The report emphasizes this "Unit" is not yet formal BRICS policy and remains largely at a conceptual exploration stage. The report concludes by citing a symbolic data point: in 2025, the total value of the global above-ground gold stock exceeded the total size of US marketable Treasury debt for the first time in 40 years.
In other words, gold as an asset class has surpassed the world's primary safe-haven asset in scale. History has indeed returned.
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