Central Banks Bet on Gold as Geopolitical Risks Mount

The latest OMFIF report, which surveyed 74 institutions managing over $10 trillion in assets, highlights a significant shift in monetary strategy. Eighty-two percent of respondents currently hold physical gold, a marked increase from 71% just one year ago. For these institutions, the metal has transitioned from a niche hedge to a core strategic asset, with 30% of managers planning to expand their allocations further over the next two years.

Andrea Correa, head of research at OMFIF, noted that the appetite for gold remains robust even as costs rise. Reserve managers increasingly view bullion as the most reliable shield against a fragmented international monetary system. While the U.S. dollar maintains its status as the primary reserve currency, nearly 80% of those surveyed anticipate a gradual move toward a multipolar financial structure, prompting a long-term pivot away from traditional government debt.

Geopolitical volatility is the primary catalyst for this trend, with 85% of managers citing conflict in the Middle East as a top macroeconomic threat, followed closely by uncertainty surrounding U.S. foreign policy. In response, central banks are diversifying their portfolios, eyeing corporate bonds, gold, and public equities to secure returns and preserve capital in an era where traditional bond markets no longer provide the same level of comfort.