August 15 marks 55 years since the “Nixon Shock,” when then-U.S. President Richard Nixon stunned the world by suspending the convertibility of the dollar—the world’s reserve currency—into gold. The United States cast off the golden shackles to build dollar hegemony, while wielding its influence over payment networks as a weapon to impose successive rounds of financial sanctions. In recent years, however, wariness over excessive concentration in the dollar has grown, and China, along with many other countries, has been aggressively buying gold as a safe-haven asset. Gold, once again in the spotlight, hit an all-time high in January this year, surging roughly 160-fold from its price at the time of the Nixon Shock.
Dollar dominance is exhibiting signs of “invisible decline.” In March 2022, one month after Russia’s invasion of Ukraine, experts at the International Monetary Fund (IMF) warned that the dollar’s presence was quietly fading. That assessment has become reality: the share of dollar-denominated assets in global foreign exchange reserves fell to a record low of around 56% last year.
Behind this shift lies a “return to gold” by the world’s central banks. Following the 2008 Lehman Shock, many central banks pivoted from selling gold to purchasing it. During the Ukraine crisis, the freezing of Russia’s central bank assets by the U.S. and Europe seared into the global consciousness the sanction risks associated with dollar-based transactions. Furthermore, since the second Trump administration took office in 2025, concerns over U.S. fiscal deterioration and tariff uncertainty have accelerated the move away from the dollar.
Gold holdings by official institutions, including central banks worldwide, now total approximately 36,000 tonnes—approaching levels seen just before the Nixon Shock. In January this year, gold prices surged to around $5,590 per troy ounce, roughly 160 times the official price of $35 per ounce at the time. In addition to inflation concerns, escalating tensions in the Middle East are also fueling demand for gold as a crisis hedge.
With an eye on U.S.-China rivalry, China is spearheading gold purchases. Its post-invasion buying volume is the largest in the world, and its national holdings have climbed to fifth place, surpassing Russia. Meanwhile, its U.S. Treasury holdings have slipped to third place, behind Japan and the United Kingdom. Poland, along with India, Brazil, and other Global South (emerging and developing) nations, are also diversifying into gold.
China’s ambitions extend to challenging dollar dominance itself. President Xi Jinping has set a policy goal of making the renminbi a “global reserve currency.” Leveraging the tailwind of the gold repatriation trend, China is combining its strength as one of the world’s largest gold producers and consumers with Hong Kong’s international financial functions, launching a pilot settlement system in July. The aim is to attract gold trading away from Western-dominated markets and expand the renminbi economic sphere.
“Gold is the biggest winner of de-dollarization,” said Guan Tao, former head of the Balance of Payments Department at China’s State Administration of Foreign Exchange, who sees gold’s resurgence as opening a “third path” in the international monetary order. According to the European Central Bank (ECB), gold’s share of central bank reserve assets reached 27% at the end of last year, overtaking U.S. Treasuries—the core of dollar assets—at 22%.
Fifty-five years ago, the United States deliberately severed its link to gold to seize dollar hegemony. Now, China is attempting to transform that very gold into a foothold for challenging the dollar-centric system. The international monetary order is approaching a new turning point.