JPMorgan Chase is warning that the US dollar’s dominance in global finance is weakening. Central banks are reportedly reducing their USD reserves and buying up gold at a rapid pace.
Gold Rush: A Flight from the Dollar?
According to JPMorgan’s global FX strategy co-head, Meera Chandan, the dollar’s share of central bank reserves has fallen below 60%—a 20-year low. The bank points to the surge in gold purchases, particularly by countries like China, Russia, and Turkey, as a key indicator of this “de-dollarization” trend. These nations see gold as a safer alternative to heavily indebted fiat currencies.
While gold’s share of emerging market central bank reserves is still relatively low at 9%, it’s more than double the 4% seen a decade ago. Developed market countries hold a much larger proportion, at 20%. This increased demand is partly fueling the current gold price rally, with JPMorgan predicting prices could hit $4,000 per ounce by mid-2026.
Trouble in the Bond Market?
JPMorgan also sees signs of de-dollarization in the bond market. Foreign ownership of US Treasury bonds has been declining steadily for 15 years, dropping to 30% in early 2025 from a peak of 50% during the 2008 financial crisis. Jay Barry, head of Global Rates Strategy at JPMorgan, warns that even though foreign demand hasn’t kept up with the growth of the Treasury market, significant selling by foreign entities, particularly Japan (the largest foreign creditor), could significantly impact yields.
Is This Unprecedented?
While the dollar’s share of FX reserves is lower than it was in the early 1990s, JPMorgan acknowledges that the shift towards other currencies like the euro or the yuan is notable, but not entirely without precedent.