We are not “confronting the end of the dominance of the U.S. dollar” yet

 Reports that Gulf Arab states were in secret talks to replace the greenback in the trading of oil have weighed on the dollar and pushed gold to new record highs above $1,000 an ounce, despite the fact they were denied by Saudi Arabia's central bank chief and other officials in the region.

But moving away from the US dollar does not mean the role of reserve currency can be easily filled, or that more currencies will be ready to share the position, experts told CNBC Wednesday.

"It seems to me that the denominating price of crude needs to done in dollars. It needs to be done in a common currency, not just for Gulf crudes, but also for crudes in the U.S., the North Sea and everywhere else," John Vautrain, director & VP at Purvin & Gertz, said. "If we had a Gulf crude that was denominated in some basket of currencies, or a GCC currency, how do you exchange that versus a WTI barrel or a Brent barrel that's denominated in dollars?"

Vautrain’s view is shared by other analysts, who point out that competitiveness also plays an important part in how currencies play against each other.

"At the end of the day, these countries themselves are actually strategically managing their exchange rates against the dollar and they are doing that because they want to maintain competitiveness with U.S. consumers, because, of course, the U.S. is such a major export market," Adrian Foster, Asia Pacific head of financial markets research at Rabobank told "Squawk Box Asia." 

"So they could actually call a global currency anything they wanted, but they would still be concerned about their bilateral exchange rate with the U.S. dollar because of the importance of the U.S. consumer. So I don't think we are confronting the end of the dominance of the U.S. dollar. I think it's going to be the major currency for many years to come," Foster added.

On Tuesday, the Independent's Middle East correspondent Robert Fisk wrote that a proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.

"It's so similar to the theme about changing the U.S. dollar as the reserve currency. Obviously there's been a lot of discussion amongst the BRIC nations. China has spoken outwardly about how advantageous it would be to have a super international currency rather than relying on the dollar as the reserve currency," John Noonan, senior FX analyst at Thomson Reuters, told CNBC. "But the time frame is the problem. This is not going to happen overnight, maybe over 9-10 years." 

Still, the greenback’s credibility has suffered serious blows over the past years, because of the financial crisis which started in the U.S. and the Federal Reserve’s response of printing money to get out of the recession.

"It is desirable for the dollar not to be the reserve currency any more. And every country that owns a lot of U.S. dollars, all the countries that are getting U.S. dollar income from their exports, are not happy because the dollar is a depreciating asset. But there really is not alternative at the moment, and that's why we're seeing this spike up in gold, that seems to be the only investor hedge alternative," Noonan said.

The gyrations in commodities and precious metals are likely to continue until a conclusion is reached regarding the role of the greenback, some experts say.

"This talk has been going on for some time. It's going to continue on," Karl Eggerss, chief trader at Lafferfrishberg.com, said.

"Most people watching this should diversify away from the dollar. But it's much harder for various countries to diversify away from the dollar because they have a lot of other reasons to stay in the dollar," he added.

Source: CNBC