Banking giants JPMorgan Chase and Deutsche Bank are analyzing the dollar’s ability to maintain its global dominance.

In a new survey conducted by Reuters involving 69 foreign exchange strategists, about 33% of participants expressed reservations about the dollar serving as a safe-haven asset in times of market turbulence.

Specifically, the survey highlights that 19 out of the 51 strategists (40%) who answered an additional question say they are starting to see signs that the dollar’s standing as a safe haven is slipping and that the erosion could worsen over a long arc of time.

Says George Saravelos, global head of FX research at Deutsche Bank,

“There are some tentative risks that the dollar’s safe-haven status may be eroding. First, a weakening US outlook reduces the attractiveness of the dollar as a risk-off hedge. Second, a broader challenge to the stability of US institutions and global internal rule of law norms may decrease foreign investor willingness to allocate to dollars at the margin.”

Arindam Sandilya, JPMorgan’s co-head of global FX strategy and head of macro strategy for Asia, points out that central banks have been gradually reducing their USD holdings in favor of gold.

“History teaches us that network effects make it extremely difficult to dislodge reserve currency status in the short term, but a slower process of erosion can continue for a long time before such a binary shift in the global monetary architecture happens. [It is] more likely we see a continuation of the trends that have been in place for the past two decades – a steady decline in the US dollar’s allocation in central bank reserve holdings, and a search for alternative reserve assets such as gold.”

Gold hit a new all-time high of $3,167 earlier this week. The precious metal’s bullish price action is driving Wall Street firms to unveil higher price targets for gold.

Last month, Bank of America predicted that gold could climb to a long-term price target of $3,500. Meanwhile, Citi said that gold can reach the same price level if the US economy falls short of expected growth.

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