Gold rally: Bullion bulwarking ZiG, reserves

Zimbabwe’s economy is reaping huge benefits from the rally in global gold prices, which is driving growth of foreign currency reserves and bolstering the Reserve Bank’s capacity to roll out initiatives to support exchange rate stability. Gold prices touched new record highs, benefiting from strong global demand as a haven asset, amid geopolitical tensions and growing uncertainty from US President Donald Trump’s hostile trade policies. The downbeat global sentiment among investors, businesses and analysts has boosted Zimbabwe’s foreign currency reserves, underpinning the durable stability of the ZiG currency, which was introduced in April 2024.

Exporters, of which gold is the largest, are required to sell 30 percent of their earnings to the Reserve Bank in local currency, while gold miners pay royalties to the central bank under a price-tiered regime. Enhanced foreign currency availability and higher forex reserve holdings, driven by strong international bullion prices, enable the RBZ to maintain a functional, market-determined exchange rate and reduce reliance on the parallel market. Increased traffic on the parallel market for foreign currency can exert pressure on the exchange rate, which has an effect on inflation behaviour in Zimbabwe’s dual monetary system.

Through 2025, the domestic unit of account traded around 26,7/US$1 while the parallel market premium reduced from over 100 percent to less than 20 percent. The durable stability of the ZiG currency has helped tame previously rampant inflation and exchange rate instability, boosting investor and public confidence, enhancing predictability and enabling long-term planning. Last week, international bullion prices breached the US$5 000 price level and under the Finance Act No.

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7 of 2025, the price level triggers a 5 percent royalty rate, channelling more revenue to state coffers per ounce traded. RBZ Governor Dr John Mushayavanhu, in an interview on Friday, said that the current gold prices had markedly accelerated reserve accumulation, resulting in significant positive spinoffs on the economy and gold-backed domestic currency. “The increase in the gold price is resulting in an increase in gold reserves at the Reserve Bank as new gold deliveries substantially increase in response to the higher prices,” Dr Mushayavanhu said.

The RBZ said gold reserves had swelled from US$484,8 million in 2024 to US$1,2 billion by the end of 2025. This fortified reserve base is the bedrock of Zimbabwe’s macroeconomic turnaround.

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