Gold Surges Past $5,000 as Central Banks Pivot from Dollars to Bullion Reserves

Gold prices have risen 47% since 2025. Read why SBI Research believes central bank diversification from the dollar will continue to drive bullion record highs.

By: AXL Media

Published: Mar 7, 2026, 8:23 AM EST

Source: The information in this article was sourced from The Hindu Businessline

A Historic Transition in Reserve Management

For the first time since 1996, the global banking landscape witnessed a pivotal transition in June 2025: central banks collectively shifted their primary reserve focus away from U.S. Treasuries toward gold. This structural change has acted as the primary catalyst for the current price momentum. SBI Research highlights that this is not merely a temporary hedge but a marked long-term increase in gold holdings across the board. The diversification into non-dollar reserves is seen as a protective measure against the weakening of traditional fiat anchors in an increasingly multipolar world.

The "Quick Fix" for National Debt

The report also hints at a more radical potential development: gold reserve revaluation. Analysts suggest that central banks, including the U.S. Federal Reserve, may eventually use the soaring value of their gold reserves as a "quick fix" to alleviate mounting national debt burdens. By revaluing these assets at current market rates which have jumped from $3,448 to nearly $5,100 in just seven months nations could theoretically offset significant portions of their liabilities, though such a move would signal a massive departure from standard monetary policy.

Market Performance and the West Asia War

The surge in bullion is occurring against a backdrop of severe market distress. On March 7, 2026, the Indian stock market faced a significant sell-off, with the Sensex dropping over 1,000 points and the Nifty falling by more than 300. Simultaneously, the Indian Rupee hit a record low of 92.17 against the dollar. These fluctuations are largely attributed to the ongoing war in West Asia, which has rattled global markets and pushed investors toward safe-haven assets. While gold ETFs saw a temporary plunge in February due to price volatility, the underlying demand from institutional "whales" remains robust.