Gold’s Historic Reserve Coup Overshadowed by Rate Fears and Oil Surge
04.06.2026 - 06:33:04 | boerse-global.de
Gold has achieved a milestone that would have seemed unthinkable a decade ago: for the first time, the yellow metal makes up a larger share of global official reserves than US Treasuries. The European Central Bank’s latest report puts gold’s weight at 27%, surpassing both US government bonds and the euro. Yet this structural triumph stands in stark contrast to the metal’s recent price action. Bullion has slipped to around $4,438 an ounce, roughly 20% below its January peak, as a toxic blend of robust US labour data and surging oil prices drives investors into the dollar and away from zero-yielding assets.
The immediate trigger for the weakness is a string of surprisingly strong US economic figures. ADP’s private payrolls report came in well above forecasts, while job openings remained elevated, prompting swap markets to slash the probability of a Federal Reserve rate cut at the June meeting to just 5%. Should Friday’s official nonfarm payrolls for May also beat expectations, the hawks will tighten their grip further, amplifying the opportunity cost of holding gold.
Compounding the pressure is the deteriorating geopolitical landscape around the Persian Gulf. The collapse of ceasefire talks between Iran and the US has sent oil prices soaring, fuelling fears of a second wave of inflation that could force central banks to keep rates higher for longer. For gold, the result is a perverse dynamic: rather than benefiting from safe-haven demand, it is behaving increasingly like a risk asset, moving in lockstep with a stronger US dollar and developing a negative correlation with crude. Market observers warn that expensive oil could cement the very tightening bias that hurts bullion most.
Should investors sell immediately? Or is it worth buying Gold?
Against this tempest, central banks continue to provide a solid floor. After a brief pause in March that saw net sales, the World Gold Council reported that monetary authorities turned buyers again in April, adding a net 17 tonnes. Poland led the charge with 14 tonnes, pushing its gold holdings to nearly one-third of total reserves, while China’s People’s Bank extended its 18-month buying streak with an additional 8 tonnes. Russia, by contrast, trimmed its holdings modestly. For the full year, experts project central bank purchases of around 800 tonnes, as emerging economies press ahead with de-dollarisation.
The ECB itself tempers the euphoria around the 27% reserve share, noting that the surge is partly a valuation effect from gold’s rapid ascent in prior years. When recalculated at end-2023 prices, US Treasuries still dominate with 26%. Nonetheless, the direction of travel is unmistakable. Poland and China are emblematic of a broader shift, and each dip in the price is viewed by strategic buyers as an opportunity to accumulate.
Nowhere is the appetite for physical gold more evident than in Asia’s private investor base. Bar and coin demand hit 474 tonnes in the first quarter, a 42% jump year-on-year. Chinese individuals bought 207 tonnes of investment gold — the highest quarterly tally since 2013 — while Indian demand surged by more than a third to 62 tonnes. Asian gold ETFs have also seen heavy inflows, contrasting with capital outflows from North American funds. Meanwhile, jewellery fabrication slumped nearly a quarter, as price-sensitive fabricators wait for autumn restocking.
The structural case for gold remains intact, with analysts at OCBC Bank lifting their year-end 2026 price target to $5,600, citing persistent uncertainty and unrelenting central-bank buying. But the near-term road is littered with obstacles. The summer months historically dampen Asian jewellery demand, and strong US payrolls on Friday could lock in a hawkish Fed stance for weeks to come. For gold, the battle between a historic reserve milestone and the immediate headwinds of rate fears and oil inflation is far from resolved.
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