Trump's Impact on Global Finance: De-dollarisation and the Gold Rush
In a significant shift in global financial dynamics, the price of gold has soared past the $5,000-per-ounce mark for the first time, even as the US dollar weakened to a four-month low. This historic rally in the yellow metal is not merely a speculative bubble but reflects deeper structural changes driven by geopolitical and economic policies, particularly those of US President Donald Trump.
Central Banks Lead the Charge into Gold
The Reserve Bank of India (RBI) exemplifies this trend. Recent data reveals that the RBI's foreign exchange reserves surged by over $14 billion as of January 16, marking the largest weekly increase in ten months. Notably, nearly one-third of this rise stemmed from the appreciation in value of the RBI's gold holdings, which total 880 tonnes. Over the past year, while the value of the RBI's foreign currency assets grew by a modest 5%, total reserves expanded by 12%, with gold's value skyrocketing by 70%.
However, the RBI is not alone in this gold rush. According to World Gold Council data up to November 2025, central banks worldwide have been aggressive buyers. Poland led with purchases of 95 tonnes, followed by Kazakhstan at 49 tonnes and Brazil at 43 tonnes. In contrast, the RBI's gold holdings increased by only about 4 tonnes in 2025, highlighting that its gains are more from price appreciation than accumulation.
The Shift in Reserve Composition
What truly underscores this trend is the changing composition of central bank reserves. The RBI now holds 17% of its forex reserves in gold, up from 12% a year ago. This reallocation away from traditional dollar-denominated assets is a direct and indirect consequence of Trump's policies. Economists from Morgan Stanley recently noted that Trump's trade and sanctions strategies, coupled with the broader shift toward a multipolar world, are key factors pushing nations away from the US dollar.
Despite Trump's public stance on maintaining the dollar's global supremacy—even threatening BRICS nations with 100% tariffs if they pursue a common currency—his actions have inadvertently weakened the greenback. In 2025, the US dollar depreciated by 9%, its steepest decline in nearly a decade. This depreciation has fueled demand for safe-haven assets like gold, as investors seek stability amid Trump's policy uncertainties and geopolitical tensions.
De-dollarisation in Commodity and Debt Markets
JP Morgan analysts point out that de-dollarisation is most visible in commodity markets, where a growing share of energy is being priced in non-dollar contracts. This trend extends to sovereign debt as well. The RBI has significantly reduced its holdings of US government bonds, with India's stake dropping to $186.5 billion in November 2025 from $234 billion a year earlier. Similarly, China's holdings of US debt have hit a 16-year low.
Other entities are also vocal about reducing dollar exposure. Danish pension fund AkademikerPension announced plans to divest from US Treasuries by the end of January, citing Trump's rhetoric on Greenland and unsustainable US finances as reasons. This move follows similar decisions by other Danish funds, reflecting a broader European skepticism. Deutsche Bank warned that Trump's threats against Europe could lead to further reductions in US debt holdings by the continent, which accounted for 29% of foreign ownership of US portfolio assets as of November 2025.
Historical Context and Future Implications
The push for diversifying forex reserves away from the dollar gained momentum after the US froze Russia's reserves following the Ukraine invasion in 2022. However, signs of de-dollarisation have been evident for years. IMF data shows the dollar's share in global forex reserves fell to 58.5% in 2024, a low not seen in over three decades, down from 71% in 1999.
Ali Ahmadi, Director of Geoeconomics & Sanctions at ReshapeRisk, emphasized that meaningful de-dollarisation could reshape global security by reducing the US's ability to fund its military and exert economic pressure. For now, the dollar remains dominant, with 89% of over-the-counter forex turnover denominated in it. Yet, if Trump's administration continues on its current path, more profound changes may emerge, potentially altering the global financial landscape irrevocably.
