Gold rises, Dollar falls: How Trump is accelerating de-Dollarisation? Explained | India News

The world’s financial balance is changing, and tremors are being felt in both gold vaults and foreign exchange markets. While the US dollar fell to a four-month low on Monday, the price of gold rose above $5,000 per ounce for the first time. What was once considered a safe and stable asset for households has now become the favorite of the largest and most sophisticated investors: Central Banks.

Take the Reserve Bank of India (RBI) as a striking example. Foreign exchange reserves increased by over $14 billion in the week ending January 16, the largest weekly increase in ten months. However, almost a third of this increase came from the RBI’s gold stocks, which total 880 tonnes and are rapidly increasing in value. By contrast, the central bank’s foreign exchange holdings increased by just 5% last year, while total reserves increased by 12%. Gold alone increased the value of RBI assets by a staggering 70%.

India is also pushing for innovation in global finance. The RBI has suggested that BRICS countries should link official digital currencies to facilitate cross-border trade and tourism payments. This initiative, proposed for the agenda of the 2026 BRICS summit hosted by India, could reduce dependence on the US dollar amid rising geopolitical tensions. Although the plan has not yet been officially adopted, it marks the first time that BRICS members are considering linking central bank digital currencies. The move could upset Washington, which has previously warned against attempts to bypass the dollar.

Despite this, India was not the biggest buyer of the year. According to the World Gold Council, central banks in Poland (95 tonnes), Kazakhstan (49 tonnes) and Brazil (43 tonnes) led the increase. However, what is more important than volume is the share of gold in reserves. For India, it now represents 17% of foreign exchange reserves, down from 12% the previous year; It’s a shift strongly linked to U.S. policy under President Donald Trump.

Dollar Under Pressure

According to reports, Morgan Stanley economists recently noted that Trump’s trade and sanctions policies, combined with the global move towards multipolarity, are slowly moving countries away from the dollar. “On net, we think these factors are neutral enough to slightly accelerate the move away from the dollar, but their near-term developments will likely be critical in determining the extent of this shift,” they wrote.

Trump has made no secret of his aim to preserve the dollar’s dominance. He warned the BRICS countries that the pursuit of a common currency could “corrupt” and “destroy” the US dollar. But paradoxically, many of its actions, particularly tariffs, trade disputes and policy uncertainty, have weakened confidence in the dollar abroad. The result is that the dollar will fall 9% in 2025, the biggest decline in almost a decade, while safe haven assets such as gold will rise steadily.

Weaponizing Capital Flows

The trend is also clearly visible beyond gold. JP Morgan analysts note that a growing share of energy contracts are now priced in non-dollar currencies. Government debt markets are also changing. The RBI reduced its US government bond holdings to $186.5 billion in November 2025 from $234 billion the previous year. US debt held by China has fallen to its lowest level in the last 16 years.

Danish pension fund AkademikerPension has announced plans to withdraw from US Treasuries by the end of January, citing Trump’s Greenland ambitions and America’s unsustainable fiscal situation. Three other Danish pension funds have already expressed skepticism about US bonds. Deutsche Bank has warned that Trump’s threats to Europe could prompt the continent to cut its debt holdings in the US. “Markets are increasingly discussing the dollar elimination theme,” Nomura analysts said on Jan. 21, according to reports in Reuters.

In response, Trump promised “massive retaliation” if European countries sell US government bonds. The EU currently holds approximately $10.4 trillion in U.S. portfolio assets and accounts for 29% of foreign ownership.

A Long-Term Change

The effort to move reserves away from the dollar gained momentum after the United States froze Russian assets following the invasion of Ukraine in February 2022. But the elimination of the dollar has been following a gradual trend for decades. IMF data shows that the US dollar’s share of global foreign exchange reserves has fallen from 71 percent in 1999 to 58.5 percent in 2024, the lowest level in the last 30 years.

“Meaningful de-dollarization would have profound impacts on global security, reducing the United States’ ability to finance its military and exert coercive economic pressure,” Ali Ahmadi, Director of Geoeconomics and Sanctions at ReshapeRisk and Chief Executive Officer of the Geneva Center for Security Policy, said, according to Reuters.

Despite the changes, the dollar continues to dominate over-the-counter foreign exchange markets, accounting for 89% of turnover. Morgan Stanley warns that Trump’s debt, trade, sanctions and security policies will be crucial in determining how much the dollar’s influence declines. The US still has no close rival as a global reserve currency; but gold, now worth nearly $4 trillion in central bank reserves, has outstripped U.S. Treasury bonds for the first time since 1996.

The dollar is facing pressure from rising debt, political uncertainty and international tensions, particularly NATO tensions over Greenland. Such dynamics create both push and pull forces; alliances could strengthen the dollar’s position, but distrust could trigger a “flight to quality” that drives investors into safe-haven assets such as gold.

The world may not be ready to abandon the dollar completely yet, but as Trump’s policies continue to rattle markets, gold’s rise and the steady progress of dedollarization suggest the global financial landscape is changing in ways few could have predicted.