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.
Zimbabwe’s structured ZiG currency is backed by gold and foreign currency.
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. 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.
“As such, the total amount of gold reserves held by the Reserve Bank increased substantially from US$484,8 million in 2024 to US$1,2 billion as at the end of 2025,” Dr Mushayavanhu said.
He noted that elevated prices also result in valuation gains on existing reserves.
“Higher reserve holdings by the Reserve Bank have strengthened the bank’s capacity to sustain exchange rate stability, support market liquidity and enhance the country’s resilience to external shocks, signalling a positive shift in Zimbabwe’s macroeconomic outlook,” he said.
The stability has directly fed into rapid disinflation, with inflation dropping to a single-digit 4,1 percent in January 2026, the first local currency single-digit inflation rate since 1997.
Bullish gold prices have transformed trade balances, with Zimbabwe consistently recording strong trade surpluses.
The historic price levels provide powerful incentives for miners to expand production, promising continued gains for the sector and the national treasury. This golden rally is now central to Zimbabwe’s prospects for lasting economic stability and growth.
Monetary economist Dr Anthony Gatsi said the reserve buildup is central to restoring confidence in the domestic currency.
“Higher gold reserves improve the credibility of the ZiG by strengthening its asset backing and giving the central bank greater capacity to manage liquidity and exchange rate volatility,” Dr Gatsi said.
He said that foreign currency reserve growth has underpinned recent macroeconomic stability.
“Exchange rate stability feeds directly into lower inflation, and the current environment shows how commodity-driven reserves can anchor monetary discipline when supported by sound policy,” Dr Gatsi said.
The exchange rate has remained relatively stable, hovering around ZiG25 and ZiG27 per US dollar, while the annual ZiG inflation rate declined to 4,1 percent in January 2026, well within the SADC macroeconomic convergence range of 3 to 7 percent.
Trade economist Mr Takudzwa Maradze said rising gold prices are also reshaping Zimbabwe’s trade dynamics. “Higher gold export receipts have contributed to sustained trade surpluses from October 2025 and reduced pressure on the current account,” he said.
Zimbabwe recorded its biggest trade surplus of US$240 million in December 2025, a development Mr Maradze described as structurally significant.
“Strong gold earnings improve foreign currency availability, strengthen import cover and reduce external vulnerability during periods of global uncertainty,” he said.
The Reserve Bank expects the favourable gold price dynamics to incentivise higher production across large-scale and artisanal mining.
Dr Mushayavanhu said sustained high bullion prices provide further impetus for Zimbabwe’s gold sector to expand output and exports, capitalising on favourable market conditions.
He noted that, “The increase in the international price of gold will inevitably increase the total value of export earnings by the country, driven by both the increase in price and quantity of exported gold.
“The higher earnings will also increase earnings from export surrenders, which can be channelled into more gold purchases and direct foreign currency reserve accumulation.”
Economists say that if current trends persist, gold will remain a central pillar of macroeconomic stability, supporting reserve growth, anchoring currency stability and reinforcing low inflation over the medium to long term.-herald
