(Source: "Worker Daily" 2026-01-16)
On January 16, Bian Yang, a researcher at the National Institute for Opening-up at the w88 casino and an associate professor at the China Institute of Finance and Economics, published an article titled "The surge in gold prices reflects the diversification trend of global central bank reserve assets" in the Workers' Daily. The following is the content of the article.
In 2025, the international gold market staged a milestone - the spot gold price climbed from US$2,640/ounce at the beginning of the year to US$4,500/ounce at the end of the year, with a cumulative increase of more than 70% throughout the year. This round of surge in gold prices not only reflects the market's consensus on risk aversion, but also is a "vote of no confidence" cast by various countries in the US dollar credit system.
Cyclic drivers of interest rate cut expectations and risk aversion
In 2025, global market expectations for the Federal Reserve to shift to easing policies continue to ferment. The Federal Reserve has cut interest rates three times in total, and the federal funds rate target range has been reduced by a total of 75 basis points. As a traditional negative correlation indicator of gold prices, interest rate cuts and expectations of interest rate cuts have lowered the holding cost of gold as a "non-interest-bearing asset". This was accompanied by the cyclical weakening of the U.S. dollar exchange rate: the U.S. dollar index (DXY) fell from 108.5 at the beginning of the year to 98.3 at the end of the year, with a depreciation rate of 9.4%. Since international gold is priced in U.S. dollars, a weak U.S. dollar directly raises gold prices.
Since the beginning of 2025, the international spot gold price has started a rapid upward trend. It crossed the US$3,000/ounce mark in March, exceeded US$4,000/ounce in October, and reached a new high at the end of the year, once approaching US$4,600/ounce, ushering in the largest bull market in decades.
Frequent global geopolitical crises and armed conflicts will occur in 2025, further amplifying the safe-haven properties of gold. From the India-Pakistan border conflict in April, to Israel's military action against Iran in June, to the strategic deployment of the US military on the coast of Venezuela in September, every geopolitical friction induces a short-term outbreak of risk aversion, and increasing gold holdings has become a strategic consensus on a global scale to deal with extreme uncertainty.
Structural support for the diversification of central bank reserve assets
For a long time, U.S. dollar bonds represented by U.S. Treasury bonds (issued by the U.S. federal government, referred to as "U.S. bonds") have been regarded as risk-free assets and the "anchor" of global liquidity. At the beginning of the 21st century, US dollar bonds accounted for more than 70% of the foreign exchange reserves of various countries.
In recent years, the scale of U.S. debt has continued to rise, exceeding US$38 trillion for the first time in October 2025, accounting for 125% of GDP. The combination of the huge existing debt and the high interest rate environment has plunged the United States into a vicious cycle of "expanding deficits - additional issuance of US debt - rising interest payments - further expansion of the deficit." According to estimates by the U.S. Congressional Budget Office (CBO), interest payments on U.S. debt in fiscal year 2025 will reach $1.02 trillion, accounting for 14.7% of total government expenditures.
When U.S. debt, a safe-haven asset, itself begins to brew systemic risks, the alternative value of gold as a "super-sovereign" safe asset becomes prominent. In 2025, central banks, mainly emerging market countries, will show their firm willingness to increase their gold holdings.
The latest data from the World Gold Council shows that in the first 11 months of 2025, the central banks of Poland, Kazakhstan and Brazil ranked among the top in the world in terms of increase in holdings, reaching 95, 49 and 43 tons respectively. Data from the People's Bank of China also shows that as of the end of December 2025, it has increased its gold holdings for 14 consecutive months. What is even more landmark is that at the end of 2025, gold surpassed U.S. bonds for the first time in 30 years and became the largest asset in the global central bank reserve assets.
The uncertainty about the Trump administration’s governance has further intensified the market’s concerns about the safety attributes of U.S. debt. In the first half of 2025, the United States imposed "reciprocal tariffs" on all trading partners; in the second half of the year, the United States experienced the longest federal government shutdown in history; entering 2026, Federal Reserve Chairman Powell was under criminal investigation, and the independence of the Federal Reserve faced a crisis. It is foreseeable that the trend of central banks in emerging market countries increasing their gold holdings will continue.
Accelerating the internationalization of RMB
What needs to be made clear is that the behavior of central banks in various countries to increase their holdings of gold is essentially to achieve diversification of the reserve asset structure, rather than simply "de-dollarization". According to data from the International Monetary Fund (IMF), as of the third quarter of 2025, although the proportion of U.S. dollar bonds in various countries' foreign exchange reserves has slowly fallen to 56.9%, bonds such as the euro, the yen, and the pound have not yet posed a substantial challenge. This means that the international status of US dollar hegemony will still have inertia in the short term. However, the long-term trend of central banks diversifying their reserve assets and reducing their overreliance on U.S. dollar assets is irreversible.
As central banks of various countries increase their demand for "non-US dollar safe assets", providing high-credit RMB assets in the international market has become a new path to promote the internationalization of the RMB. In April 2025, my country's Ministry of Finance successfully issued 6 billion yuan of green sovereign bonds in London, England. The subscription amount reached 6.9 times the issuance amount, and sovereign and super-sovereign investors accounted for 30%. This fully demonstrates that in addition to gold and U.S. debt, the global market is actively looking for financial assets that are both "green" and "safe."
Currently, the RMB ranks third in the International Monetary Fund’s Special Drawing Rights currency basket. As of the end of the third quarter of 2025, the scale of RMB assets held overseas reached 10.42 trillion yuan, a new high in the past 43 months. This reflects the increasingly important role of RMB in the diversification of global reserve assets.
The surge in gold prices in 2025 is a concentrated reflection of major changes unseen in a century in the financial field. Gold's "regaining" the status of the largest asset in the world's official reserves is essentially a "collective hedging" by various countries to deal with the US dollar credit crisis. For my country, following the trend of global reserve asset diversification and using green finance as a breakthrough point to provide high-quality RMB assets is not only a rational choice to respond to changes in the external environment, but also a proactive strategy to deeply participate in global financial governance and enhance its international voice.
(Author: Bian Yang, researcher at the National Institute for Opening up, w88 casino, associate professor at China Institute of Finance)
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