Gold Price Will Continue to Rise as Central Banks Continue to Diversify Into Non-Dollar Reserves: SBI Research

Why It Matters

A broad move toward gold reshapes reserve composition, supporting higher prices and offering a potential fiscal lever for debt‑laden governments, especially the United States.

Key Takeaways

• Gold price up 47.6% since Aug 2025.
• US, Germany hold over 80% reserves in gold.
• SBI predicts continued price rise as banks diversify.
• US may revalue gold, adding $1.3 trillion assets.
• Revaluation could cut deficit but risk inflation.

Pulse Analysis

The recent rally in gold reflects more than a simple commodity bounce; it signals a strategic realignment among sovereign investors. As the dollar’s dominance wanes and geopolitical tensions rise, central banks are bolstering their balance sheets with assets that are both liquid and perceived as safe havens. This shift has already pushed spot prices above $5,000 per ounce, a level not seen since the early 2000s, and analysts expect the trend to persist as more nations diversify away from dollar‑denominated securities.

In the United States, the prospect of revaluing the Federal Reserve’s gold reserves could become a fiscal game‑changer. By moving the statutory $42.22 per ounce valuation to current market levels, the Treasury could record an additional $1.3 trillion in assets—roughly four percent of GDP—and dramatically shrink the $38.8 trillion debt burden. The proposal, linked to the controversial Bitcoin Act, would also enable the Treasury to leverage gold for cryptocurrency purchases, further blurring the line between traditional reserves and digital assets. While the accounting boost improves fiscal flexibility, it does not directly reduce liabilities, and the revaluation could introduce balance‑sheet volatility.

Nevertheless, the strategy carries significant risks. A sudden surge in recorded asset values may force corresponding liability adjustments, potentially stoking inflationary pressures if the monetary base expands to accommodate the new accounting entries. Moreover, heightened gold demand could exacerbate price volatility, affecting industries from jewelry to technology. Investors and policymakers must weigh the short‑term fiscal relief against long‑term macroeconomic stability as the gold market continues its upward trajectory.