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In the 1990s, many developed countries sold part of their gold reserves, while the U.S. dollar became the dominant currency in the global financial system. The Cold War was over, globalization was accelerating, the U.S. economy was strong, and U.S. government bonds were the ultimate safe haven.
But that world view is changing rapidly. According to a recent report by Deutsche Bank Research Institute is the role of gold in the reserves of central banks making a historic comeback. Not because the monetary system has formally returned to a gold standard, but because the geopolitical environment is fundamentally changing.
In a world where confidence in geopolitical stability, free trade and dollar reserves is declining, gold is becoming more attractive again.
After the fall of the Berlin Wall, the world seemed to be moving towards one dominant model for a long time. The United States was the undisputed superpower. Global trade grew explosively. Emerging economies built up huge currency reserves, often in dollars. U.S. government bonds were liquid, safe, and yielded interest. Gold didn't do any of that.
That is why gold's share of central banks' reserves fell sharply, says Deutsche Bank.
Not immediately after the end of Bretton Woods in the 1970s, but especially in the nineties. That is an important point. According to Deutsche Bank, the decline in gold had less to do with the disappearance of the formal link between the dollar and gold, and more with the geopolitical and economic calm that followed.
That peace is hard to find by now. The world is moving towards larger power blocs, strategic competition, and economic fragmentation.
The United States is withdrawing from free trade and global security commitments in some areas, while China is increasingly being an alternative center of power. At the same time, inflation, budget deficits and geopolitical tensions have returned as dominant themes.
There is another important element to this. In recent years, the financial infrastructure around the dollar has often been used as a geopolitical tool. The freezing of Russian dollar and euro reserves in 2022 was a signal to many countries that foreign exchange reserves carry not only a financial but also a political risk.
Gold has a unique property in that regard. It's not someone else's fault. It does not depend on the ability of a government, a bank or a central bank to pay. And when it's physically stored domestically, it's out of the immediate reach of foreign sanctions or blockages.
The shift is visible in the numbers. The dollar's share of global central bank reserves has fallen from more than 60 percent to around 40 percent, according to Deutsche Bank. At the same time, the share of gold has risen to 30 percent.
Part of that increase is of course due to the higher gold price. But according to Deutsche Bank, that's not the whole story. Central banks, especially in emerging markets, have been buying gold structurally since the 2008 financial crisis. These purchases not only provide more physical gold in reserves, but also support the gold price itself.
It is remarkable that demand mainly comes from emerging countries. Russia, China, India, Turkey and Poland are among the biggest buyers in recent years. Countries in Eastern Europe and the Middle East have also increased their gold reserves considerably, especially since the Russian invasion of Ukraine.
Nevertheless, according to Deutsche Bank, there remains a lot of room for further growth. Emerging markets still hold relatively little gold compared to developed economies. At the end of 2025, around 16 percent of emerging countries' reserves consisted of gold, compared to 34 percent in developed economies. The question is whether emerging countries see the need to investing in gold, as outlined by Deutsche Bank here.
Deutsche Bank also outlines a more far-reaching scenario. In the past, gold often played a central role in monetary systems. Under Bretton Woods, the dollar was indirectly linked to gold. This has not been the case formally since 1971. However, that does not mean that gold can never have a monetary function again.
In a world where countries outside the West are working on alternative payment systems, local currency settlement and digital infrastructure, gold can become an anchor again. Not necessarily via a classic gold standard, but possibly via means of payment or reserve systems partially backed by gold.
That may sound a long way off. But the direction is interesting. If countries want to become less dependent on the dollar, they need to build trust in alternatives. Gold can help with this, precisely because it is internationally recognisable, scarce and not an obligation on the part of another party, according to Deutsche Bank researchers.
According to Deutsche Bank, gold is making a strong comeback in central bank reserves due to growing geopolitical uncertainty and declining confidence in the dollar. Emerging countries, in particular, are buying more gold as a strategic, politically independent reserve asset.
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