Hedge fund manager David Einhorn predicts a historic shift in global reserves as central banks move away from U.S. dollars toward gold, citing unstable U.S. trade policy and soaring deficits.

After a strong start, the price of gold slipped twice to around $5,060 during this trading week. Now, it appears that gold prices might manage to stay just above $5,100 heading into the weekend, continuing the persistent sideways movement of the past five weeks.

Geopolitical tensions, and concerns about fiscal policy and central banks, have driven the gold price to where it is today.

Hong Kong is accelerating its drive to become a global gold trading hub, in a move that supports China’s broader ambition to strengthen its influence over international bullion markets amid a shifting geopolitical landscape and record-high prices.

[SMM Aluminum Express News] Inalum CEO Melati Sarnita expressed optimism that Indonesia can achieve aluminum self-sufficiency by 2030. She highlighted that reducing import dependence on alumina and aluminum could boost foreign exchange reserves by 394%—from Rp11 trillion to Rp52 trillion annually—by providing domestic manufacturers with reliable local raw material supply. The strategy emphasizes import substitution and integration of green energy in the aluminum value chain, supported by ongoing downstream projects (bauxite-alumina-smelter) in Mempawah and elsewhere.

Driven by the decline in the US dollar index and the overall rise in global financial asset prices, China's foreign exchange reserves continued their upward trend. Data released by the State Administration of Foreign Exchange on February 7 showed that, as of the end of January, China's foreign exchange reserves amounted to $3,399.1 billion, an increase of $41.2 billion from the end of December 2025, representing a growth of 1.23%. Data published on the same day on the website of the People's Bank of China indicated that, as of the end of January, China's gold reserves reached 74.19 million ounces, up 40,000 ounces MoM. This marks the 15th consecutive month that the People's Bank of China has increased its gold holdings.

On Tuesday this week, the latest survey of fund managers released by Bank of America once again revealed a fact that most people already knew: nearly everyone on Wall Street is currently shorting the US dollar.

Affected by the geopolitical conflicts in the Middle East, the COMEX gold price continued to break through upwards, and the secondary market prices of gold-related ETFs also rose for consecutive days. According to this year's data, the year-to-date gains of all gold-related ETFs in the entire market were above 27.9%. Among them, the six ETFs tracking the SSH Gold Stock Index showed strong growth, with year-to-date gains all above 41%. During this period, the scale of gold-related ETFs in the entire market gradually climbed, increasing from 72.608 billion yuan at the beginning of the year to 163.120 billion yuan, representing a growth of 124.66%. Several fund companies believe that due to uncertainties in tariffs and geopolitics, risk-averse capital may flow into gold. Coupled with the impaired credit of the US dollar and US Treasuries, as well as the continuation of central bank gold purchases and the major cycle of interest rate cuts by the US Fed, the medium and long-term allocation value of gold continues to be favored. Gold ETFs Continue to be "Favored" with Market Size Exceeding 160 Billion Yuan On June 16, affected by the geopolitical conflicts in the Middle East, COMEX gold broke above 3450, and gold and gold stock indices continued to rise, with related ETFs once again gaining market attention. Data shows that since June 10, multiple ETFs tracking the SSH Gold Stock Index have risen by more than 7%, while several other gold ETFs and Shanghai Gold ETFs have risen by more than 2%. Looking at earlier data, as of June 13, the year-to-date gains of all gold-related ETFs in the entire market were above 27.9%. Among them, the six ETFs tracking the SSH Gold Stock Index showed strong growth. The Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF achieved a year-to-date gain of 43.46%, while the ChinaAMC CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, ICBC CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, Guotai CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, Hua'an CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, and Ping An CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF also rose by 43.27%, 42.79%, 41.79%, 41.79%, and 41.31%, respectively. Some ETF shares that experienced redemptions during the earlier period of gold price fluctuations and adjustments have also shown signs of "recovery". Since the Israel-Iran conflict, half of the gold-related ETF shares in the entire market have increased. Since the beginning of this year, the total shares of gold ETFs in the entire market have increased by 10.538 billion, and the scale has increased by 90.512 billion yuan, reaching a latest market size of 163.120 billion yuan, representing a growth of 124.66%. Among these, there are products whose scales have doubled. For example, the scale of the Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF increased from 1.651 billion yuan at the beginning of the year to 4.755 billion yuan now, nearly tripling; the E Fund Gold ETF increased by 13.240 billion yuan from 13.248 billion yuan at the beginning of the year to 26.488 billion yuan; the Guotai Gold ETF increased by 11.399 billion yuan from 7.142 billion yuan at the beginning of the year to 18.541 billion yuan. During the same period, Bosera Gold ETF also increased from 15.004 billion yuan to 29.26 billion yuan. Products such as Huaxia Gold ETF, ICBC Gold ETF, Fullgoal Shanghai Gold ETF, and CCB Principal Shanghai Gold ETF have all shown multi-fold growth in scale since the beginning of this year. The momentum to increase gold allocation remains. Regarding the future allocation value of gold-related assets, multiple fund companies believe that under the current circumstances, market participants are more motivated to continuously increase their gold allocation. Data shows that central banks are continuing to increase their gold holdings. The People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) announced the official reserve asset data for May. As of the end of May 2025, China's gold reserves stood at 73.83 million ounces, up 60,000 ounces MoM, marking the seventh consecutive month of growth. "The potential geopolitical conflict risks in Iran and other countries, along with the escalation of related conflicts, may catalyze global attention to safe-haven assets, making the upward logic of gold prices more robust," pointed out Liu Tingyu, the fund manager of Yongying Gold Stock ETF. Hua'an Fund expressed that, against the backdrop of the U.S. debt crisis and the erosion of the U.S. dollar's credit, global central banks may continue to purchase gold and diversify their foreign exchange reserves. Meanwhile, due to uncertainties surrounding tariffs and geopolitics, safe-haven funds may flow into gold. Coupled with the erosion of the U.S. dollar's and U.S. debt's credit, as well as the continuation of central bank gold purchases and the broader cycle of the US Fed's interest rate cuts, the company continues to be optimistic about the medium and long-term allocation value of gold. Regarding tariffs, Liu Tingyu believes that the U.S. Federal Court of Appeals' extension of the deadline for the Trump administration's tariff enforcement issues implies that its tariff policies can still be implemented normally. Under this assumption, the contradictions within the Trump administration in the U.S. will significantly ease, and it is expected that Trump will have sufficient room to act hawkish in the coming period, further reducing the suppressive factors on gold. Additionally, gold is positively correlated with inflation in the long term, and the significant rise in oil prices will also affect gold prices through inflation. "Finally, we are more concerned about the main logic of gold—the weakening trend of the credit of the U.S. dollar and U.S. debt. The U.S. fiscal deficit in May was $316 billion, with the annual deficit up 14% YoY, further plunging into deficit. This year, the market's confidence in U.S. fiscal discipline has continued to wane, and the 'America COMPETES Act' may exacerbate the upward trend of the deficit. The avoidance of extreme risks in U.S. debt may become the main driving force for gold prices," Liu Tingyu said. Looking ahead, he believes that as the uncertainties surrounding U.S. tariffs and the rise in the deficit rate further erode the credit of the U.S. dollar and U.S. debt, the global trend of "de-dollarization" will intensify, and market participants will be more motivated to continuously increase their allocation of gold assets. It is worth mentioning that with the upward shift in the gold price center and the continuous expansion of gold mining companies' production, the performance of gold stocks is expected to continue to grow rapidly. Gold jewelers are also experiencing a turning point in performance and a trend toward product high-endization, which similarly offers good growth potential.

Affected by the situation in the Middle East in recent days, international gold prices have strengthened in the short term. image On Friday, COMEX gold futures rose by 1.47%, accumulating a 3.18% increase for the week. After three consecutive days of strong gains, it has approached its previous high. On the news front, according to CCTV International News, on the morning of June 14 local time, the Israeli military stated that it had detected a fifth round of missile attacks launched by Iran and was intercepting them. This indicates that the conflict is ongoing. In the short term, geopolitical risks continue to boost market risk-averse sentiment, potentially providing further support for gold prices. Bank of America expects gold to rise to $4,000 per ounce within the next 12 months. Guojin Futures had previously also stated that the escalation of tensions in the Middle East would drive up gold prices. Although gold had seen some adjustments earlier, the downside potential was relatively small, with prices being constrained within a certain range over the long term. Hot topics will have an impact on gold prices. It is worth mentioning that a recent report by the European Central Bank showed that gold has surpassed the euro to become the second-largest reserve asset among global central banks, underscoring that gold, as a safe-haven asset, remains favored by global central banks. According to the European Central Bank's annual report on "The International Role of the Euro," the US dollar accounted for 46% of global foreign exchange reserves in 2024, a slight decrease from the previous year. The report stated that the share of gold in global foreign exchange reserves has significantly increased to 20%, surpassing the euro to become the second-largest reserve asset globally. This indicates that central banks tend to diversify their foreign exchange reserves and strive to mitigate geopolitical risks. Goldman Sachs also stated that the structurally strong gold-buying behavior of central banks will drive gold prices to reach $3,700 per ounce by the end of 2025 and $4,000 per ounce by mid-2026. Overall, as the situation in the Middle East unfolds, geopolitical risks may also become a key factor influencing the short-term trend of gold prices, causing them to hold up well.

A month ago, Caixin reported that as Trump's erratic tariff policies last month triggered a wave of selling of US assets, a new wave of "de-dollarization" was gaining momentum in Asia. Now, an increasing number of market participants are clearly unable to ignore the "rise" of this trend... On May 26, ASEAN committed in its newly released "Strategic Plan for the ASEAN Economic Community 2026-2030" to promoting the use of local currencies in trade and investment, and proposed measures such as expanding the use of local currencies for settlement and strengthening regional payment connectivity to mitigate the impact of exchange rate fluctuations. Lin Li, Head of Asia Global Markets Research at Mitsubishi UFJ Financial Group (MUFG), told the media that as Asian economies seek to reduce their reliance on the US dollar, particularly by using their own currencies as a medium of exchange to reduce foreign exchange risks, the trend of de-dollarization is strengthening. Although de-dollarization itself is not a new phenomenon, recent developments may have undergone a qualitative change. Investors and officials are beginning to recognize that, even if the US dollar has not been openly weaponized in trade negotiations, it can and has been used as a "bargaining chip." Mitul Kotecha, Head of Asia FX and Emerging Markets Macro Strategy at Barclays, said that this has prompted a reevaluation of investment portfolios that were previously heavily overweight in the US dollar. "Countries are focusing on the fact that the US dollar has been and can be used as a weapon in trade, direct sanctions, and other areas... I think this is the real change over the past few months," he said. Two Forces Accelerating the Evolution A recent report by Bank of America pointed out that the trend of ASEAN moving away from the US dollar is intensifying, driven by two main forces: ① Individuals and businesses are gradually starting to convert their US dollar savings back into local currencies; ② Large investors are beginning to hedge foreign investments more actively. Abhay Gupta, Asia Fixed Income and FX Strategist at Bank of America, said, "The de-dollarization process in ASEAN may accelerate, primarily through the conversion of foreign exchange deposits accumulated since 2022." In addition to ASEAN, BRICS countries, including India and China, are also actively developing and promoting their own payment systems to bypass traditional Western payment systems like SWIFT and reduce reliance on the US dollar. China has also been promoting the use of the yuan for bilateral trade settlement. Barclays' Kotecha pointed out that de-dollarization is a "continuous, slow process," but the gradual decline of the US dollar's status can be witnessed in both central bank reserve shares and trade settlement shares. He specifically mentioned the substantial overseas assets held by countries such as Singapore, South Korea, and China, which have significant potential for repatriating foreign exchange earnings. Andy Ji, Asia FX and Rates Analyst at ITC Markets, shares this sentiment. He points out that economies most reliant on trade will experience a more pronounced decline in demand for the US dollar. He specifically mentioned the economies within the 10+3 cooperation mechanism, which includes China, Japan, South Korea, and the 10 ASEAN member states. As of November last year, over 80% of trade in this region was still denominated in US dollars. Nomura Securities has observed a new trend: Asian investors are strengthening their hedging against US dollar exposure. Nomura notes that as Asian investors increasingly hedge against US dollar risks, a trend of de-dollarization is also emerging. Foreign exchange hedging refers to investors protecting themselves from significant currency value fluctuations by locking in exchange rates to avoid losses in the event of unexpected weakening or strengthening of the US dollar. Craig Chan, Global Head of FX Strategy at Nomura Securities, stated, "Some of the currencies that have recently performed strongly include the Japanese yen, South Korean won, and New Taiwan dollar." He observed that a considerable portion of foreign exchange hedging transactions come from institutional investors such as life insurance companies, pension funds, and hedge funds. According to Nomura Securities, the hedging ratio of Japanese life insurance companies was originally around 44%. In April and May, this figure rose to around 48%. Nomura Securities estimates that the hedging ratio of life insurance companies in Taiwan, China, is around 70%. When investors hedge against US dollar risks, they sell US dollars and buy local or other currencies, which increases demand for the US dollar and causes non-US currencies to appreciate against the US dollar. Is a structural shift underway? Clearly, the rise of this de-dollarization trend has once again raised a "perennial" question: Is this merely a phase of temporary reduction in US dollar holdings, or a more drastic structural shift? In fact, although similar shifts are more pronounced in Asia, the world is actually reducing its reliance on the US dollar—the share of the US dollar in global foreign exchange reserves has declined from over 70% in 2000 to 57.8% in 2024. Recently, due to uncertainties surrounding a series of decisions by the Trump administration, the US dollar has experienced a significant decline this year, particularly in April. Since the beginning of this year, the US dollar index has fallen by more than 8%, marking the worst performance in the first five months of the year in history, according to Dow Jones Market Data. However, some industry observers also state that despite many countries reducing their reliance on the US dollar, it remains challenging to replace the US dollar as the primary reserve currency. Cedric Chehab, chief economist at BMI, said that, for now, this may still be merely cyclical. He pointed out that it could only transform into a structural trend if the US implements sanctions more aggressively, prompting central banks to be wary of holding excessive US dollars, or if governments mandate pension funds to increase their holdings of domestic assets. Of course, the first threat mentioned by Chehab may have already occurred to some extent. What undoubtedly concerns many foreign entities the most is undoubtedly "Clause 899" in Trump's latest tax reform bill. If approved by Congress, this clause would allow the US to impose additional taxes on companies and investors from countries it deems to be implementing punitive tax policies. George Saravelos, global head of FX research at Deutsche Bank, said that this would mark the formal incorporation of the weaponization of US capital markets into law. Francesco Pesole, FX strategist at ING, pointed out that "Trump's erratic trade policy decisions and the significant depreciation of the US dollar may be encouraging a faster shift towards other currencies." Peter Kinsella, global head of FX strategy at Union Bancaire Privée, reminded people to distinguish between the weakening of the US dollar and de-dollarization. "The US dollar has gone through multiple cycles of depreciation, yet its hegemony as a reserve currency remains unchanged," he added. Even with reduced exposure, the US dollar's core position in trade invoicing remains solid—over half of global trade was still settled in US dollars in April this year. However, Kinsella also mentioned that, "the long-term declining trend in the US dollar's status as a reserve asset will continue, and I firmly believe that gold will be the biggest beneficiary." According to a report released by the European Central Bank on Wednesday, gold accounted for 20% of global official reserves in 2024, making it the second-largest reserve asset globally, second only to the US dollar at 46%.