Central Bankers Reaffirm Gold’s Safe Haven Role Amid Rising Yields

Gold has maintained 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, particularly relevant in today’s environment of high geopolitical risk and economic fragmentation. Bundesbank President Joachim Nagel noted that while rising yields make bonds more attractive, the case for diversification into gold remains strong due to geopolitical stress and credit risks associated with high debt levels.

Analysts observed that gold prices, though down around 4% this year, have remained well-supported by central bank buying and safe-haven demand, keeping prices above $4,000. Altimari highlighted a structural shift in the gold market since 2022, driven by central-bank purchases in emerging economies and concerns over high public debt. This shift has weakened gold’s traditional inverse relationship with real bond yields, a trend particularly evident last year and early this year.

Looking ahead, demand from central banks is expected to slow by 15% year-on-year to 720 metric tons in 2026, but it will remain above pre-2022 levels. In China, the top gold consumer, the market is increasingly driven by investment demand and institutional investors, with bar-and-coin purchases surpassing jewelry consumption for the first time in 2025, according to Shanghai Gold Exchange vice president Zeng Hui.