Gold prices surged to record high $1,045 an ounce a week ago after a report surfaced that global oil producers are planning to stop using the U.S. dollar for oil trade.

“There’s no telling the veracity of these reports, but the general trend has been going in this direction anyway: a weaker dollar and rising gold,” Brien Lundin, editor of the Gold Newsletter told MarketWatch.

Finance ministers and central bank governors from China, Russia, Japan, Brazil, and Middle Eastern oil producers met to discuss plans to stop using the U.S. dollar for oil trade, The Independent reported. The dollar would be replaced by a basket of currencies that includes gold, which could be a big reason behind the precious metal’s recent run-up in price.

The dollar has been the world’s main reserve currency since the end of World War II, but its volatility and its vulnerability have made it a burdensome barrier to global trade. Developing nations such as Brazil, India, and China have had to purchase dollars to pay for oil and oil producing nations in the Middle East have accumulated vast reserves of dollar holdings. Meanwhile, the dollar’s precipitous decline has eroded the value of these holdings and the recent financial turmoil has cast doubt over the dollar’s reliability.

The new plan allegedly being hatched would end the dollar’s role in oil trade and replace it with a basket of currencies that includes the Japanese yen, Chinese yuan, the euro, gold, and a new unified currency that would be shared by nations in the Gulf Cooperation Council (GCC). The GCC includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). Together, these Gulf nations hold more than $2 trillion in U.S. dollar reserves.

In addition to being a part of the currency basket that’s on deck to replace the dollar, gold also may serve as a transitional currency in the shift, Chinese banking sources told The Independent.

“News on gold’s expected future role in oil transactions between these trading partners has sent the price past $1,020,” Peter Spina, chief investment analyst at GoldSeek.com, told MarketWatch.

Trading gold and other currencies in exchange for oil would “establish gold as a recognized medium of exchange, returning it a step closer to its role as money on a world trade system,” Spina noted, while the dollar would be further removed.

“Really, it has been the pricing of oil in dollars for trade that has given it a huge boost in its demand globally,” he said. “If [other countries] switch away from the U.S. buck, then all that demand disappears, the need for the U.S. dollar diminishes, and its value should reflect this.”

The plan to shift away from the dollar, which The Independent confirmed with both Gulf Arab and Chinese banking sources, would take effect by 2018.

“These plans will change the face of international financial transactions,” one Chinese banker told the British paper. “America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.”

The story was indeed denied by officials in Kuwait and Qatar.

“We have never heard of this or discussed this, not even secretly,” Abdullah bin Hamad Al Attiya told Zawya Dow Jones.

However, such denials are being drowned out by the dollar’s very vocal critics who have painted the backdrop of the financial crisis with fiery rhetoric. China, which alone holds more than $1 trillion in dollar-denominated assets, has led the charge displacing the U.S. currency.

Zhou Xiaochuan, Governor of the People’s Bank of China (PBC), in March released an essay entitled “Reform of the International Monetary System” on the PBC website.

Without explicitly mentioning the U.S. dollar, Zhou asked what kind of international reserve currency the world needs to secure global financial stability and facilitate economic growth.

Zhou called for the “re-establishment of a new and widely accepted reserve currency with a stable valuation” to replace the U.S. dollar – a credit-based national currency. The central bank governor noted that the International Monetary Fund’s (IMF) Special Drawing Right (SDR) should be given special consideration.

That kind of criticism led to U.S. Treasury Secretary Timothy Geithner’s first official trip to China where policymakers expressed “justifiable confidence in the strength and resilience and dynamism of the American economy.”

“I wish to tell the U.S. government: ‘Don’t be complacent and think there isn’t any alternative for China to buy your bills and bonds,’” Yu Yongding, a former central bank adviser who interviewed Geithner for the China Daily newspaper, told Bloomberg News. “The euro is an alternative. And there are lots of raw materials we can still buy.”

Brazil and India have often joined China in the chorus of complaints about the dollar, and along with Russia, issued their first-ever joint communiqué ahead of a spring meeting between G-20 finance ministers.

In July, Treasury Secretary Geithner took to the road again to assure Saudi Arabia of its investment in the dollar in a visit that seemed to foreshadow this latest report of the dollar’s undoing. But that may have been too little, too late.

Recently, IMF figures showed that the dollar’s share of total reserves has fallen to its lowest level since 1995.

“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” Robert Zoellick, a former U.S. trade representative who now heads the World Bank, recently told the School of Advanced International Studies of Johns Hopkins University. “One of the legacies of this crisis may be a recognition of changed economic power relations.”

Skeptics argue that the dollar is far too entrenched in its position as the world’s main reserve currency to be dislodged, and that at the moment, there is no viable alternative.

However, Iran, the second largest producer the Organization of Petroleum Exporting Countries (OPEC) has already stopped taking oil payments in dollars and has encouraged other oil producers to do the same.

“Iran did this about three years ago,” Ali Khatibi, Iran’s OPEC governor told Dow Jones. “We replaced dollars with other valuable, stable currencies including the euro and yen for our oil income and we are very happy and not sorry we did this because the dollar is becoming weaker. If anybody wants to use our experience we will be happy to help.”