BUZZ-COMMENT-Gold is the new king of currencies

Feb 5 (Reuters) - Gold has surged to a record high this month and for the time being is the new king of currencies.

While it is unlikely gold can usurp the dollar altogether, it has certainly far outperformed the greenback since the shock investors received when they piled into the greenback in 2022.

In that year demand was so great that investment in the dollar became overcrowded, resulting in an abrupt reversal. While the dollar has risen again it has been far surpassed by gold.

The greenback which reached its highest point since 2006 in January - highest for available data - has risen roughly 6% from 2022's low, but is only around 1% above 2022's peak.

Gold has rocketed from just above $1600/oz in October 2022 toward $2900/oz this month has virtually doubled in the same period.

This stratospheric rise could be the result of changes in foreign exchange reserves where central banks are seeking ways to mitigate risks stemming from a reserve currency that is booming even when the U.S. is at the epicentre of concerns.

That is the case now with investors fretting over the policies of the new Trump administration, and was also the case during the U.S. banking crisis in 2023 and the global financial crisis in 2008.

Many of the nations with the largest reserves that may be subject to change are politically opposed to the United States. Should they refocus on a more durable and liquid asset that is supported by a big economy, like China's yuan, the shift from the dollar could be much more significant.

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