Gold retains key reserve status despite surging bond yields, central bankers say

Gold continues to hold a vital role in reserve assets, even amidst rising bond yields and geopolitical tensions, according to central bankers. Sergio Nicoletti Altimari, deputy governor of the Bank of Italy, commented on the matter at the London Bullion Market Association’s annual conference in Sorrento, Italy. Despite US Treasury yields reaching multi-decade highs, gold prices have remained relatively strong, supported by central bank buying and safe-haven demand, hovering above $4,000.

Joachim Nagel, President of the Bundesbank, explained that the appeal of bonds as reserve assets has increased due to rising yields. However, diversification into gold is still crucial due to ongoing geopolitical risks and credit risk from high debt levels. Altimari noted that while central bank demand for gold is expected to decline by 15% year-on-year to 720 metric tons in 2026, it is projected to stay above pre-2022 levels.

The gold market has undergone a structural shift since 2022, marked by central-bank purchases in emerging economies and heightened concerns over public debt and fiscal expansion.

Shanghai Gold Exchange vice president Zeng Hui added that in China, the market is now driven primarily by investment demand and institutional investors, with bar-and-coin purchases outpacing jewelry consumption for the first time in 2025.