Nagel: gold nears 25% of global reserves, case for diversifying into it remains

Victoria Shinder12 October 2026, 08:282 min read

Joachim Nagel, President of the Deutsche Bundesbank, used a keynote at the Global Precious Metals Conference in Sorrento on 5 October — published by the BIS on 7 October — to set out how geopolitics is changing growth, monetary policy and the place of gold in central bank reserves.

On policy, a familiar line. Nagel said central banks cannot prevent the first-round price effect of an energy shock — "higher policy rates do not produce more oil or gas" — but must act if the shock becomes persistent and feeds into prices and wages. He cited ECB staff projections of euro area inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, upside risks from low gas storage and refining outages, and no clear signs yet of second-round effects. The ECB raised rates by 25 basis points in June and September, taking the deposit rate to 2.5%; decisions remain meeting by meeting.

Why central banks hold gold. Reserves are insurance: they provide foreign currency under stress, support the exchange rate and underpin confidence. Managers weigh liquidity, safety and return. Foreign exchange reserves are better for intervention and liquidity; gold's distinguishing feature is that it does not depend on an issuer or counterparty paying, which makes it a diversifier.

Anchor, retreat, return. Nagel described three chapters. After the war gold anchored the monetary system; during globalisation it retreated as a share of reserves. After the global financial crisis central banks — most notably China's and Russia's — returned as buyers. He gave two reasons: low yields on government securities, partly due to asset purchase programmes, cut the opportunity cost of holding gold; and since the late 2010s geopolitics, including financial sanctions. "Foreign securities and deposits can potentially be frozen. Physical gold held domestically is not subject to the same risk."

The numbers. Citing IMF data at market value, gold's share of global reserves rose from 10% in 2009 to about 14% in 2023. In advanced economies it held at around 20%; in emerging and developing economies it rose from 3% to 8%. From 2023 to 2025 the global share jumped to almost 25% — but mainly because of higher gold prices: at 2023 prices, the share would have fallen to 12%.

Where next. Higher bond yields have made debt securities more attractive again, Nagel said, but rising debt levels raise concerns about their credit risk, and geopolitical risk will keep shaping reserve decisions. His conclusion: "the case for further diversification into gold remains significant." He did not comment on the Bundesbank's own gold holdings in the speech.

Source: BIS, speech by Joachim Nagel, Sorrento, 5 October 2026 — https://www.bis.org/speeches/20261007-shifting-ground-how-geopolitics-reshaping-growth-monetary-policy-and-role-gold-reserve-asset.pdf