Gold prices have increased by more than $3,000 per ounce since the current bull market began in October 2022, when the price was $1,500. Today, gold is trading over $4,500, an absolute return of 200% during this period.
In a recent report from Deutsche Bank Research Institute, the authors argue that the gold price could rise to $8,000 over the next five years. That is a larger gain than in the preceding bull market. This suggests that gold prices can rise by another 77% from their current levels.
Central Banks Gold Buying
The role of central banks, particularly in emerging markets, is noteworthy. EM central banks have been actively buying gold and driving pressure on prices upward, and there is significant scope for EM to add to this. “If the world diversifies trade and security dependence away from the US, this would be consistent with less USD and more gold in reserves,” notes the study.
Behind the reasons for gold to keep shining, the report suggests that the share of US dollars in central bank reserves is once more in decline. The share of the USD in global central bank reserves has dropped sharply from around 60% at its peak to just 40%, while gold’s share in global central bank reserves has doubled in the past four years to nearly 30% today.
Even in an environment where EM FX reserves decline to USD5tn, gold prices could still rise to $8,000 over the next five years, if EM countries all target a 40% gold share, says the Deutsche Bank Research Institute report.
EM central banks had just 16% of total reserves in gold compared to 34% for DM central banks by the end of 2025. There thus remains a significant gap to close, if not ultimately exceed.
Taken together, Gold now accounts for 20% of foreign exchange reserve assets held by central banks — surpassing even the euro, which stands at 16%, after the US dollar, which retains 46%. In the case of the RBI, gold occupies 17.2% of India’s foreign exchange reserves.
Which Countries are Buying More Gold
According to the report, almost half of EM central bank holdings are accounted for by just China, Russia and India. But many middle powers like Turkiye, Kazakhstan, and Saudi Arabia are also significant holders.
Strikingly, in Eastern Europe, more than half of the gold holdings of Czechia and Poland have been acquired in the past four years alone, after Russia’s invasion of Ukraine. Many MENA states like Qatar, Egypt and the UAE have acquired between 25-50% of their total gold holdings in the last few years alone.
RBI’s Gold Holdings
The RBI’s total gold holdings hit a record of 880.3 tonnes at the end of 2025. But during the year, the RBI lowered its gold purchases to 4.02 tonnes, a dramatic decrease from 72.6 tonnes in 2024. Following a four-month break, in 2026, the RBI purchased 0.13 tons of gold in January but none in February.
Forces Behind the Move
The report suggests that gold’s share in central bank reserves is a function of three main drivers: the volume of gold held, the price of gold, and the stock of FX reserves. The first two forces are already underway. EM central banks have been actively buying gold and prices have been rising. The third force of active reduction in US holdings is yet to begin, but could be very significant.
All three drivers could be at play together, suggesting there is more to go in gold’s rise and the dollar’s decline as a share of global reserves.
Written by MrSunil Dhawan
Source: FinancialExpress
Disclaimer: This article draws on third-party research and is intended for general awareness and education only. Not trade recommendation.
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