Central bankers say gold keeps its reserve role even with bond yields at multi-decade highs

Gold retains key reserve status despite surging bond yields, senior central bankers said on Monday^3,5. Gold remains a vital reserve asset because of central bank demand and geopolitical risks, according to the officials quoted⁶. Speaking at the LBMA gathering, Bundesbank president Joachim Nagel said “the case for further diversification into gold remains significant”, and linked reserve composition to geopolitical risk^2,8.

Altimari said the gold market had undergone a structural shift since 2022, driven by central-bank purchases in emerging economies^3,5. The scale of that shift is now visible in the stock of reserves: gold makes up 27 per cent of global central bank reserves by value, against 22 per cent for US Treasuries¹.

The conference framing was that central banks are not done with gold, with geopolitical risk reshaping reserve portfolios². Nagel said geopolitical risks are likely to continue to shape reserve decisions⁸, and the officials quoted tied gold’s standing to that risk as much as to central bank demand itself⁶.

Why it matters to investors

The opportunity cost has rarely been higher. Gold traded at $4158 an ounce and was capped below $4230 while the 10-year Treasury yield held at 5.28 per cent¹. Reserve managers, by the account given at the conference, operate on a logic unrelated to that yield comparison¹.

Flow forecasts show a slowdown, not a reversal. Metals Focus forecasts central bank gold demand will fall 15 per cent year on year to 720 metric tons but remain above pre-2022 levels⁴. Finimize’s read of the same number is that the 720-metric-ton forecast explains gold’s support above $4,000 even as purchases slow⁷. For private investors, that makes the official sector a price floor rather than a price driver^4,7.

What to watch

The first thing to watch is whether the 720-ton forecast holds, since it is the bridge between a slowing bid and a still-supported price^4,7. The second is the composition data: gold’s 27 per cent share of reserves against 22 per cent for Treasuries is the clearest statement of where reserve managers have already moved¹.

Third is the yield side. A further rise would test the claim that reserve logic is insensitive to it, with gold’s recent range set against a 10-year yield of 5.28 per cent¹. Nagel’s framing ties the case to geopolitics rather than to rates^2,8, and Altimari dates the structural change to 2022 rather than to the current yield move^3,5. Watch whether emerging-market buyers keep adding at these prices^3,4.