Gold Keeps Reserve Status Amid Geopolitical Risks and Rising Yields

Gold remains a vital reserve asset despite rising bond yields, according to central bankers speaking at the London Bullion Market Association’s annual conference in Sorrento, Italy. The metal’s safe-haven appeal is strengthening amid geopolitical risks and high government debt levels, even as prices have fallen around 4% this year due to surging U.S. Treasury yields.

Sergio Nicoletti Altimari, deputy governor of the Bank of Italy, emphasized gold’s enduring role as a safe-haven asset, particularly in today’s volatile environment. Bundesbank President Joachim Nagel acknowledged that rising yields make bonds more attractive but stressed that diversification into gold is still crucial given geopolitical tensions and credit risks from high debt.

Analysts note that central bank buying and safe-haven demand have kept gold prices above $4,000. While central bank demand is expected to slow by 15% year-on-year to 720 metric tons by 2026, it will still remain higher than pre-2022 levels. Altimari highlighted a structural shift in the gold market since 2022, driven by purchases from emerging economies and concerns over public debt.

Zeng Hui, vice president of the Shanghai Gold Exchange, pointed to significant changes in the gold market’s demand structure and pricing framework. In China, the world’s top gold consumer, investment demand and institutional buyers are now surpassing jewelry consumption for the first time in 2025.