Central Bankers Affirm Gold's Safe Haven Status Amid Rising Yields

Gold continues to hold its status as a key reserve asset despite rising bond yields, according to central bankers. Speaking at the London Bullion Market Association's annual conference in Sorrento, Italy, Sergio Nicoletti Altimari, deputy governor of the Bank of Italy, emphasized gold's role as a safe haven asset. He noted its enduring appeal during crises and its relevance in today's environment of high geopolitical risk and economic fragmentation.

Bundesbank President Joachim Nagel acknowledged that rising yields make bonds more attractive to reserve asset managers. However, he stressed that geopolitical stress and credit risks from high debt levels still justify diversification into gold. Analysts point out that while gold prices have fallen about 4% this year due to surging U.S. Treasury yields, they have remained above $4,000, supported by central bank buying and safe-haven demand.

Sergio Nicoletti Altimari highlighted a structural shift in the gold market since 2022, driven by central-bank purchases in emerging economies. Demand has also been bolstered by concerns over high public debt and fiscal expansion, weakening gold's traditional inverse relationship with real bond yields. The gold market has seen profound changes in demand structure and pricing framework in recent years, according to Shanghai Gold Exchange vice president Zeng Hui.

In China, the top gold consumer, the market is increasingly driven by investment demand and institutional investors. For the first time in 2025, bar-and-coin purchases surpassed jewelry consumption. Central bank gold demand is expected to slow by 15% year-on-year to 720 metric tons in 2026, though it will remain above pre-2022 levels.