Nagel: Gold Share in Central Bank Reserves Jumps to 25%

Speaking at the London Bullion Market Association conference, Bundesbank President Joachim Nagel said that the share of gold in global central bank reserves rose from about 14% in 2023 to nearly 25%, driven partly by rising prices and partly by changing geopolitical risks.

Nagel added that 'the case for further diversification into gold remains strong,' noting that domestically stored bullion does not rely on an issuer or counterparty, and can be frozen with greater difficulty than foreign securities or deposits.

Germany is the world's second-largest official holder of gold with more than 3,500 tonnes, and a large portion of this gold is kept within the country, a point Nagel emphasized in his speech, making the central bank chief's statements an important reference for the region's reserves.

According to the report, the rise in gold's share of reserves is due to a combination of surging prices and shifting geopolitical risks, reinforcing the metal's status as a reserve asset that is not tied to an issuer or dependent on a counterparty.

What Do These Terms Mean?

Central Bank Reserves: Foreign assets held by central banks to support their currency and meet obligations.

Diversification: Distributing reserves across different assets to reduce risk instead of relying on a single asset.

Bullion: Gold cast into standard bars and held as a reserve asset.

Geopolitical Risks: Political and military tensions between countries that could impact markets and assets.