empty
21.06.2023 12:49 PM
Central banks prepare for a new monetary regime

This image is no longer relevant

Central banks of many countries around the world appear to be preparing for a new monetary regime. Reportedly, in the first quarter of 2023, they added 228 tonnes to their gold reserves, following last year's record-breaking purchase of 1,136 tonnes. This kept prices above $1,900 despite the hawkish position of the Federal Reserve.

This image is no longer relevant

Over the past two years, central banks have not only become a huge source of demand but also a driving force throughout the decade. In 1930, 1968, and 1998, changes in the monetary and credit regime had a significant stimulating effect on commodity prices. This could be the same in this decade.

This means that dollar may be on the brink of losing its status as a reserve currency, which will cause a massive shock to markets.

Countries also began to move away from dollar, with Brazil readying to settle trade in agricultural products with China in yuan, France's TotalEnergies selling its LNG to China in yuan, and Saudi Arabia talking about settling oil payments in yuan. However, these cannot be classified as a change in the monetary regime because China has a closed capital account, and countries trading in yuan cannot exchange it.

Any move by China to oust the US dollar as a reserve currency should include some degree of gold convertibility. Foreign holders could convert part of their positive trade balance in yuan into gold through the Shanghai Gold Exchange. Central banks buy gold because of this.

In fact, China took serious steps to increase its gold reserves by purchasing gold. Since November 2022, it acquired 144 tonnes of gold, so it currently amounts to about 2,092 tonnes.

Perhaps, by the end of the year, gold will surpass $2,000.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

USD/CAD. Analysis and Forecast

The pair is trending lower, dropping close to the key psychological level of 1.3800 amid broad-based U.S. dollar weakness. Traders have raised their expectations for Federal Reserve rate cuts following

Irina Yanina 16:43 2025-05-23 UTC+2

USD declares war on EUR

What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following

Marek Petkovich 14:59 2025-05-23 UTC+2

USD/JPY: what happens with yen?

The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed

Irina Manzenko 13:52 2025-05-23 UTC+2

Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)

Markets continue to act blindly amid the chaotic actions of Donald Trump, who is trying to pull the U.S. out of a deep, all-encompassing crisis like Baron Munchausen pulling himself

Pati Gani 10:19 2025-05-23 UTC+2

The Market Tucks Its Tail

A necessary project at the wrong time. The House of Representatives has approved Donald Trump's tax cut initiative. The President hopes it will help stimulate the economy and offset shortcomings

Marek Petkovich 09:29 2025-05-23 UTC+2

GBP/USD Overview – May 23: No Talks, but Hang in There

On Thursday, the GBP/USD currency pair traded relatively calmly, but like EUR/USD, it has been rising for two weeks. At first glance, one might wonder what reasons traders have

Paolo Greco 08:15 2025-05-23 UTC+2

EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical

Paolo Greco 08:15 2025-05-23 UTC+2

What to Pay Attention to on May 23? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Friday. Only two are noteworthy: the final estimate of Germany's Q1 GDP and April's UK retail sales data. The German GDP report

Paolo Greco 05:58 2025-05-23 UTC+2

The "Big, Beautiful Bill" vs. Import Tariffs

At present, Donald Trump is focused on promoting what he calls the "Big, Beautiful Law." In the trade war, Trump has done everything he could—he imposed tariffs, then lowered them

Chin Zhao 00:23 2025-05-23 UTC+2

The Fed Is Not Ready to Act Before the Second Half of the Year

In recent reviews, I have repeatedly addressed the topic of the Federal Reserve's monetary policy, market expectations, and the reality we all live in. I believe the market's expectations

Chin Zhao 00:23 2025-05-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.