US policy promotes gold price increase
According to the annual report "Reserve Management Trends" conducted by HSBC in collaboration with Central Banking, the US's economic and trade policies are raising concerns about the stability of global central banks.
US protectionism is a top risk facing central banks even the survey conducted in response to the tariff announcements in early April 2025 had a strong impact on the financial market, the report said.
Reserve managers are adapting to increased uncertainty, with up to 50% having intervened in the foreign exchange market in the past 12 months, and many banks have adjusted their portfolios due to geopolitical risks - the report said.
The report involved 91 central banks, representing more than $7,100 billion in global reserves. The results show that reserve managers are rapidly adjusting their strategies to deal with increasingly volatile trade policies and geopolitical uncertainties, HSBC said.
Regarding the USD, central banks' views are quite different: Although the de-dollarization process is being viewed as taking place slowly, the number of banks increasing investment in USD is still more than the number of cuts - according to the report.
US tariffs and trade protection measures are currently considered the most serious risk, with 44% of central banks considering this a top concern.
In the medium term, reserve managers will continue to focus on inflation and interest rates factors that the majority consider the most important for reserve management in the next 5 years, the report said. At the same time, geopolitical instability is increasingly affecting risk management and asset allocation decisions. 73% have now included this factor in their strategy, up from 67% in 2024.
The report also said that 50% of central banks have intervened in the foreign exchange market in the past year and if not including the Eurozone, this figure will exceed 60%. Of which, half of banks with reserves of over 100 billion USD have taken action.
Notably, 54% of central banks said they plan to increase foreign exchange and gold reserves.
The main reason is to maintain investor confidence and use reserves as a tool to cope with exchange rate fluctuations, the report explained.
Although gold prices are continuously hitting new peaks, only 37% of central banks see high gold prices as an obstacle and they still plan to increase gold reserves next year. Most consider gold a portfolio diversifier, a long-term store of value asset, a good choice in times of crisis, and a hedge against geopolitical risks.
views on the US dollar are divided
A report from HSBC shows that the de-dollarization process is being accelerated by BRICS countries to reduce dependence on the USD. However, the majority of reserve managers believe that the decline in the role of the USD will take place gradually.
"At the time of the survey, stronger US economic growth and the Fed's policy of keeping high interest rates caused 16% of banks to increase investment in USD, compared to 9% of investment reduction. However, the situation may have changed after recent events, the report said.
Most banks increasing their USD investment have cut other traditional reserve currencies and are also skeptical about the effectiveness of investing in non-traditional currencies due to high costs.
In the bond market, confidence in the UK and Germany has recovered over the past year, while China is rated lowest, only above Japan, the report said.
There is no sign that central banks are interested in stablecoin or cryptocurrency. No bank considers Bitcoin a suitable reserve asset, nor does anyone invest in cryptocurrency, HSBC said.
Currently, many central banks believe that diversifying reserve assets is the key to future strength.
When asked about the strategy for the next 12 months, half of the banks plan to diversify assets, about 1/3 want to increase liquidity, and the same rate will extend the investment term, but still pay attention to the development of the yield curve.
In the context of many fluctuations, reserve managers are showing the necessary flexibility and sensitivity to adapt to political and economic changes in 2025 - the report concluded.
