De-dollarisation, war, and debt: Why gold is regaining monetary relevance

Why in news

The article discusses the resurgence of gold as a monetary asset driven by de-dollarisation, geopolitical tensions, and the shift toward a multipolar global financial structure.

Background

Central banks in China and India are actively accumulating gold reserves. Conversely, countries facing economic pressure are selling reserves to meet short-term dollar requirements.

Facts for Prelims

• FactGold is being used as a signal of confidence in weakening global systems.
• FactChina and India are identified as key nations actively accumulating gold reserves.
• FactThe rise of alternative currencies like the yuan is contributing to the shift away from a single-center global economic structure.

For Mains

Q. Analyze the factors driving the resurgence of gold as a monetary asset in the context of global de-dollarisation and the shift toward a multipolar economic order.

Dimensions to cover in your answer

• Monetary shift: Transition from dollar-centricity to multipolar currency systems and commodity-backed reserves
• Geopolitical risk: Gold as a hedge against systemic instability and weaponization of the US dollar
• Reserve management: Trade-off between long-term gold accumulation and short-term liquidity needs in debt-distressed nations

Keywords: De-dollarisation · Multipolarity · Monetary Policy · Reserve Assets · Geopolitical Risk · Commodity Hedging

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