Central banks across the globe are increasingly turning to gold and reassessing their exposure to the U.S. dollar as geopolitical instability and protectionist trade policies from the United States shake global economic confidence. This is according to the HSBC Reserve Management Trends 2025 report, released in collaboration with Central Banking.
U.S. Policies Seen as Major Risk by Global Reserve Managers
The report, based on responses from 91 central banks managing over $7.1 trillion in reserves, identifies the Trump administration's protectionist trade stance as the most pressing concern for reserve managers. Notably, these views were recorded before the April 2025 U.S. tariff announcements, which have since rattled financial markets and increased global volatility.
"U.S. protectionist policies have emerged as the biggest risk facing central banks today," the report states. A significant 44% of respondents named U.S. trade actions as their top concern, surpassing inflation, interest rates, and regional conflicts.
Gold Demand Surges Amid Geopolitical Tensions
Amid rising uncertainty, gold has emerged as a preferred safe-haven asset. Over 37% of central banks surveyed plan to increase their gold allocations in the coming year. Gold is being seen not just as a store of value, but also as a geopolitical and portfolio diversifier.
"Gold prices are reaching record highs on a near-weekly basis," the report notes, yet few central banks consider high bullion prices a deterrent to further investment.
Dollar Divides Opinion as De-Dollarisation Gains Momentum
Views on the U.S. dollar remain split. While some central banks are boosting their dollar holdings—primarily due to stronger U.S. economic growth and the Federal Reserve’s "higher-for-longer" interest rate stance—others are exploring de-dollarisation strategies.
“More central banks are increasing dollar holdings (16%) than decreasing them (9%),” the report states. However, a growing number of countries, especially within BRICS, are actively pursuing ways to reduce their dependence on the greenback.
FX Market Interventions Becoming More Common
Foreign exchange market interventions have become an increasingly common strategy among central banks. The report reveals that 50% of respondents intervened in FX markets in the past year, a figure that rises to over 60% excluding Eurozone countries.
“These interventions are often under-reported because they typically go unannounced,” HSBC noted. Among central banks with reserves exceeding $100 billion, half reported taking action, frequently buying and selling their local currencies to stabilize exchange rates.
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Diversification and Liquidity Key Priorities for 2025
Looking ahead, central banks are focusing on diversification, liquidity management, and interest rate exposure. Around 50% plan to diversify their reserve assets, while nearly a third expect to increase both liquidity and duration in their portfolios—decisions heavily influenced by yield curve behavior and market volatility.
Cryptocurrencies and Stablecoins Remain Off the Table
Despite the buzz around cryptocurrencies, the report shows no central banks currently invest in Bitcoin or other digital assets. A solid two-thirds oppose using crypto as a strategic reserve, although nearly 25% expressed uncertainty, suggesting a cautious but watchful approach.
Central Banks Brace for Continued Instability
As 2025 unfolds with escalating trade tensions, inflation risks, and global uncertainty, central banks are increasingly agile in adapting their reserve strategies. The HSBC report underscores the growing reliance on gold, foreign exchange flexibility, and diversification as tools to buffer against shocks.
“Reserve managers are demonstrating the agility and resourcefulness needed to navigate the political and economic uncertainty of 2025,” the report concluded.
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