Gold prices surged to a four-month high on Monday, buoyed by expectations of a U.S. Federal Reserve rate cut and safe-haven demand.
The rally coincides with a landmark shift in global finance flagged by prominent economist Mohamed A. El-Erian, showing central banks’ direct holdings of gold now exceed their U.S. Treasury holdings as a percentage of foreign reserves for the first time in nearly three decades.
Gold Climbs To A Four-Month High
Spot gold climbed to $3,489.78 an ounce, its highest point since mid-April, marking a fifth consecutive day of gains.
The immediate price catalyst is growing market conviction that the Federal Reserve will implement a rate cut this month. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Simultaneously, uncertainty surrounding U.S. trade tariffs and political pressure on the Fed have enhanced gold’s appeal as a safe-haven asset for investors.
Gold Over US Treasuries For The First Time In 30 Years
Underpinning this market rally is a deeper, structural trend highlighted by El-Erian. In a post on the social media platform X, he shared a chart indicating that, for the first time since 1996, global central banks’ allocation to gold in their international reserves has surpassed their allocation to U.S. Treasuries.
The chart illustrates a multi-year trend of central banks steadily accumulating gold while gradually decreasing their share of U.S. government debt.
See Also: Central Banks Worldwide Hold More Gold Than US Treasuries For 1st Time In Nearly 30 Years: ‘Significant Global Rebalancings’ On Cards Says Analyst
Central Banks Diversify Holdings
This strategic pivot by monetary authorities reflects a broader global movement towards diversification and de-dollarization.
Otavio (Tavi) Costa, a macro strategist at Crescat Capital, suggests that geopolitical instability and a desire to reduce reliance on the U.S. dollar are key drivers behind this shift.
This sustained and large-scale buying from the official sector provides a strong fundamental support for the gold price, complementing the short-term speculative interest. The trend signals a potential long-term rebalancing in the global financial system, with significant implications for the future roles of both gold and the U.S. dollar as reserve assets.
Price Action
Gold Spot US Dollar rose 0.77% to hover around $3,474.71 per ounce, as of the publication of this article. Its last record high stood at $3,500.33 per ounce. The price of the precious yellow metal has surged 21.55% over the last six months and 39.15% over the last year.
Here is a list of a few gold ETFs that investors can consider as the central banks ramp up their gold reserves.
| Gold ETFs | YTD Performance | One Year Performance |
| Franklin Responsibly Sourced Gold ETF (NYSE:FGDL) | 29.70% | 38.19% |
| Goldman Sachs Physical Gold ETF (BATS:AAAU) | 29.71% | 38.28% |
| GraniteShares Gold Trust (NYSE:BAR) | 29.84% | 38.50% |
| VanEck Merk Gold ETF (NYSE:OUNZ) | 29.61% | 38.28% |
| SPDR Gold Trust (NYSE:GLD) | 29.60% | 38.12% |
| iShares Gold Trust (NYSE:IAU) | 29.71% | 38.25% |
| SPDR Gold MiniShares Trust (NYSE:GLDM) | 29.82% | 38.52% |
| abrdn Physical Gold Shares ETF (NYSE:SGOL) | 29.74% | 38.35% |
| iShares Gold Trust Micro (NYSE:IAUM) | 29.86% | 38.59% |
| Invesco DB Precious Metals Fund (NYSE:DBP) | 29.63% | 33.16% |
The U.S. Dollar Index spot was 0.22% lower at the 97.5580 level. The dollar has declined by 10.11% on a year-to-date basis.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell on Friday. The SPY was down 0.60% at $645.05, while the QQQ declined 1.16% to $570.40, according to Benzinga Pro data.
Read Next:
- Fed's Dovish Turn Puts Gold ETFs In The Limelight: Top Picks To Cash In
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock
