Bundesbank's Nagel Backs Gold Buying as Central Banks Diversify

Bundesbank President Joachim Nagel said on Monday the case for central banks to keep diversifying into gold remains significant, even as rising bond yields make government debt more attractive to reserve managers. The remarks came at the London Bullion Market Association's annual conference in Sorrento, Italy. The Bundesbank holds more than 3,500 tonnes of gold, the second-largest official holding in the world. Gold has stayed above $4,000 despite US Treasury yields sitting at multi-decade highs, a combination that historically would have pressured the metal far harder than it has.

Context — why Nagel's gold comments matter now

The report gives no prior-year figure for Bundesbank gold purchases, so the weight of the remarks rests on the institution behind them. A reserve manager running more than 3,500 tonnes does not speak about diversification in the abstract. Nagel framed the argument around counterparty risk: physical gold depends on no issuer or counterparty meeting a financial obligation, while foreign securities and deposits can be frozen through sanctions. Gold held domestically carries none of that exposure.

That is a structural argument, not a tactical one. It also explains why the recent rise in yields has not broken gold the way the old playbook suggested. Higher yields raise the opportunity cost of holding a non-yielding asset. Nagel acknowledged exactly that tension, saying higher yields make bonds relatively more attractive to reserve asset managers.

Bank of Italy Deputy Governor Sergio Nicoletti Altimari pushed the same theme further. He described gold as arguably the safe haven asset and said the market has undergone a structural shift since 2022, driven by emerging-market central bank buying. He added that gold's traditional inverse relationship with real yields has weakened amid concerns about public debt and fiscal expansion.

That is the catalyst chain. Sanctions risk and sovereign debt concerns pulled official-sector demand forward, and that demand has not reversed even as the yield calculus turned against gold. Nagel's comments confirm the buyers are still there.

Data — what the numbers show

The Bundesbank's more than 3,500 tonnes is the anchor figure. For scale, that is the second-largest official holding globally, behind only the United States. It represents a stock, not a flow, but it tells you the institution speaking has the balance sheet to move the market if it chooses.

Metals Focus expects central bank gold demand to slow by about 15% this year, to around 720 tonnes. That is the counterweight to everything Nagel said. The forecast does not call for selling, only for slower accumulation.

Shanghai Gold Exchange Vice President Zeng Hui said Chinese purchases of bars and coins overtook jewellery consumption for the first time in 2025. That is a demand mix shift inside the world's largest consumer market, and it points to investment appetite rather than adornment.

The before-and-after here is straightforward. Official-sector buying drove the structural shift Nicoletti Altimari dates to 2022. The Metals Focus forecast says that pace cools by roughly 15% this year. Gold above $4,000 with Treasury yields at multi-decade highs is the price outcome of those two forces meeting.

Analysis — what it means for gold markets and miners

If gold's inverse link to real yields has genuinely weakened, as the Bank of Italy argues, then the sensitivity of the gold price to rate moves is lower than history implies. That matters for anyone modelling gold off the 10-year Treasury yield. The old regression is less reliable than it was.

The second-order effect lands on producers and royalty names. Gold miners carry operating use to the metal, so a floor under the price supports margins. The report cites Asian producers hoarding metal at home, from Laos refining to Indonesia's 15% tax, which is a supply-side signal rather than a demand one.

The acknowledged limitation is Metals Focus. If official-sector demand slows 15% to around 720 tonnes, gold needs investment demand to fill the gap. Deutsche Bank's Ghali has argued gold is oversold and underowned. Bank of America has warned that oil is gold's biggest enemy right now, with downside risk below $4,000. Morgan Stanley's Gower sees $4,000 as a strong floor, citing three supports.

Positioning is split. Official-sector buyers are long and slow-moving. Tactical money is watching yields and the Fed. The flow question is whether ETF and bar-and-coin demand picks up the slack the central banks leave.

Outlook — what to watch next

This week's Fed minutes are the near-term driver. The market will read them for the rate path, which feeds directly into the yield tension Nagel described. Any signal that cuts are closer would ease the opportunity-cost argument against gold.

Watch the $4,000 level. Morgan Stanley's Gower calls it a strong floor, and Bank of America flags downside risk below it. That makes it the line where the structural bid either holds or does not.

Watch official-sector purchase data against the Metals Focus forecast of roughly 720 tonnes. If buying runs ahead of that, the diversification case is strengthening in practice, not just in speeches. If it undershoots, gold leans harder on investment demand.

Watch the real-yield relationship itself. If gold keeps holding above $4,000 while yields stay at multi-decade highs, the Bank of Italy's weakened-link thesis gets another data point.

Frequently Asked Questions

What does Nagel's gold comment mean for retail investors?

It signals that a major official holder still sees gold as a reserve asset with no counterparty risk. For retail investors, that is context rather than a signal. The Bundesbank's mandate is reserve management, not return seeking. Retail exposure to gold comes with different tax treatment, storage costs and liquidity than an official vault. The report offers no retail-specific guidance.

Why has gold stayed above $4,000 with Treasury yields so high?

The Bank of Italy's Nicoletti Altimari points to a structural shift since 2022, driven by emerging-market central bank buying and concerns about public debt. When official buyers accumulate for sanctions-risk and fiscal reasons rather than yield, the usual inverse link to real yields weakens. Metals Focus still expects central bank demand to slow about 15% this year.

What happens to gold if central banks slow their buying?

Metals Focus expects official-sector demand to fall to around 720 tonnes this year. That does not mean selling, only slower accumulation. Gold would then lean more on investment demand, including bars and coins, which already overtook jewellery consumption in China in 2025. Bank of America has flagged downside risk below $4,000 if that support does not materialise.

Bottom Line

Nagel's endorsement keeps the official-sector bid intact, but Metals Focus's 15% slowdown forecast hands gold's next leg to private investors.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.