Bundesbank President Joachim Nagel said the case for central banks to diversify further into gold remains significant, even as higher bond yields make government debt more attractive. Gold's share of global central bank reserves has risen to almost 25% from about 14% in 2023.
At a glance
- The Bundesbank holds more than 3,500 tonnes of gold, the world's second-largest official holding.
- Nagel said gold held at home cannot be frozen by sanctions, unlike foreign securities and deposits.
- Metals Focus expects central bank gold buying to slow by about 15% this year, to around 720 tonnes.
Background
Central banks hold reserves, mostly foreign currencies, government bonds and gold, to back their currencies and handle crises. Gold carries no counterparty risk, meaning its value does not depend on any issuer paying its debts. Germany's Bundesbank is one of the largest gold holders, and the London Bullion Market Association's annual conference is a key meeting point for central bankers and the bullion trade.
What he said
Bundesbank President Joachim Nagel said the case for central banks to diversify further into gold "remains significant." He spoke on Monday at the London Bullion Market Association's annual conference in Sorrento, Italy.
Nagel said the world has entered a new geopolitical environment that is reshaping how central banks think about the safety of their reserves. Gold's share of global central bank reserves has climbed to almost 25%, from around 14% in 2023.
Why central banks want gold
His main argument was counterparty risk. Foreign securities and deposits can be frozen through sanctions, while physical gold held at home faces no such exposure. He also pointed to rising government debt, which has increased worries about the credit risk of bonds.
Nagel acknowledged the other side. Higher bond yields make government debt more attractive to reserve managers, and US Treasury yields are at multi-decade highs. Bank of Italy Deputy Governor Sergio Nicoletti Altimari said gold's traditional inverse link with real yields has weakened amid concerns about public debt.
What it means
Endorsements from two of Europe's largest official gold holders support the view that central bank buying will keep underpinning demand. Nicoletti Altimari called gold "arguably the safe haven asset" and said the market has shifted structurally since 2022, driven by emerging-market central bank buying. Shanghai Gold Exchange Vice President Zeng Hui added that Chinese purchases of bars and coins overtook jewellery for the first time in 2025.
The signals are not all one way. Consultancy Metals Focus expects central bank gold demand to slow by about 15% this year, to around 720 tonnes. That leaves gold more dependent on investors while rising yields weigh on prices.
Our read
Outlook: bullish. Steady official buying gives gold a floor of demand over the long run. In the near term, high bond yields and Fed expectations matter more for price.
What to watch
- Monthly central bank gold purchase data, including China's buying streak.
- Whether higher bond yields slow official gold demand as Metals Focus expects.
For information only, not investment advice.
Gold price in India
metalscost.com India reference price as of 2026-10-24.
Detailed analysis
Timeline
- 2026-10-05: Nagel speaks at the LBMA annual conference in Sorrento, Italy.
Interest Rates
Higher bond yields make government debt more attractive to reserve managers.
Central Banks
Gold's share of global central bank reserves has risen to almost 25% from about 14% in 2023.
Geopolitical Risks
Sanctions risk on foreign assets is pushing central banks toward gold held at home.
What could lift prices
- Central banks see gold as protection against sanctions and rising government debt.
- Gold's link to real yields has weakened, according to the Bank of Italy.
What could weigh on prices
- Metals Focus expects central bank buying to fall about 15% this year.
- Multi-decade-high bond yields make government debt more attractive to reserve managers.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Germany | Medium | The Bundesbank holds more than 3,500 tonnes of gold. |
| China | Medium | Chinese bar and coin buying overtook jewellery for the first time in 2025. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Bullion Trading | Positive | Continued official demand supports the physical gold market. |
Who gains, who loses
- Long-term gold holders: Official buying adds steady demand under prices.
- Government bond markets: Central banks diversifying into gold hold fewer foreign bonds.
Other ways this could play out
- If sanctions risk keeps rising, more central banks could raise their gold share.
- If bond yields stay at multi-decade highs, reserve managers may slow gold purchases as Metals Focus expects.
Price risks
- A sharper slowdown in central bank buying would leave gold more reliant on investors.
- Further rises in bond yields could weigh on gold in the near term.
Historical comparison
- 2023: Gold made up around 14% of global central bank reserves, against almost 25% now.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
Germany
China