Central Banks Add 39 Tonnes in August as Gold's Reserve Role Hardens

World Gold Council: central banks added 39 tonnes in August, taking 2026 official buying to 170 tonnes, as Nagel flags gold's role in reserves.

Official-sector demand for bullion shows no sign of cooling. The World Gold Council reported that central banks booked net purchases of 39 tonnes in August, with China leading the way at 20 tonnes and Uzbekistan and Poland each adding 8 tonnes. That brings cumulative official buying for 2026 to 170 tonnes through the end of August.

The figures land against a market pulled in two directions. A firmer dollar and elevated US Treasury yields are weighing on the non-yielding metal, while fading expectations for another Federal Reserve rate hike in October are keeping a floor under prices. Gold traded up 0.3% at $4,151.52 an ounce during the session.

Nagel: Gold Carries No Counterparty Risk

Speaking at the Global Precious Metals Conference — the LBMA's annual gathering in Sorrent — Bundesbank President Joachim Nagel argued Monday that geopolitical shocks continue to shape both inflation and monetary-policy risk. A fragmenting, less predictable world, he said, raises fundamental questions about diversification and the place of gold in currency reserves.

Physical bullion held domestically, Nagel noted, carries no counterparty risk and cannot be blocked, unlike foreign securities or deposits. That distinction has become a selling point as sanctions risk moves up the agenda for reserve managers.

The Bundesbank itself holds more than 3,500 tonnes, making it the world's second-largest official holder. Nagel also pointed out that gold's share of global central bank reserves has climbed from roughly 14% in 2023 to nearly 25% — though he was careful to add that a substantial chunk of that increase reflects the metal's own price gains rather than fresh buying alone.

Survey Points to Record Appetite

The World Gold Council's latest survey underscores how durable that demand has become. Some 45% of monetary authorities questioned intend to expand their holdings over the next twelve months — the highest reading since the poll began. An even larger group, 89%, expects global reserves to rise overall. Beyond hedging geopolitical risk, respondents cited gold's long-term store-of-value function as a primary motive.

Rising sovereign debt could lift the credit risk attached to government bonds, Nagel said, reinforcing the case for crisis-resistant assets. UBS analyst Giovanni Staunovo framed the same dynamic as a persistent structural tailwind for gold, even as a robust dollar and high yields cap upside during short-term rallies.

Yields Still the Main Brake

The rate backdrop remains the chief headwind. Higher yields make fixed-income government paper more attractive to asset managers, since gold pays no interest. About a month ago the Fed raised its policy rate; since then the metal has shed 6.7%. Spot prices slipped 0.2% on Tuesday to $4,131.95 an ounce.

The most recent US jobs report came in weaker, tempering expectations for further tightening in October, yet long-dated Treasury yields are still hovering near multi-year highs.

What stands out is how resilient gold has been to the textbook playbook. Sergio Nicoletti Altimari, deputy governor of the Banca d'Italia, told the Sorrent audience that the traditionally inverse relationship between gold and real yields has weakened since 2022. Structural shifts driven by state reserve buyers are absorbing at least part of the pressure from rising rates.

What Traders Are Watching Next

Attention now turns to Washington. The Fed publishes the minutes of its mid-September policy meeting on Wednesday, which could shed fresh light on the rate path. Then on October 14 the US Labor Department releases September consumer price data. An inflation surprise would likely shift rate expectations again, feeding through the dollar and bond yields to deliver an immediate impulse to bullion.

Geopolitics could prove just as decisive. Kyle Rodda of Capital.com sees tensions in the Middle East as a major driver for the sessions ahead — should they escalate, demand for safe havens would quickly move back to the foreground.