Central banks’ massive gold purchases have helped drive prices to record highs this year, but one Asian policymaker says his country might want to consider selling.
“Our holdings of gold are already excessive,” Benjamin Diokno, a Monetary Board member and a former governor of the Philippines’ central bank, told Bloomberg on Monday.
Gold makes up about 13% of the Bangko Sentral ng Pilipinas’s $109 billion in gross international reserves — a larger share than most of its Asian peers. Ideally, Diokno said, that ratio should sit closer to 8% to 12%.
The Philippines built up its holdings when gold traded around $2,000 per troy ounce. Prices have since more than doubled, briefly topping $4,380 last week before pulling back below $4,000 as geopolitical tensions eased and investors took profits.
“Shouldn’t you sell already?” Diokno asked. “What will happen if the price goes down?”
Diokno’s comments highlight an internal debate at the central bank over whether to keep accumulating gold or start taking profits.
In 2024, the central bank sold some of its gold holdings before prices surged, drawing criticism. The central bank has said it actively manages its reserves, including gold, to meet the Philippines’ foreign exchange requirements.
Current Filipino central bank governor Eli Remolona said earlier this year that the central bank doesn’t speculate on gold prices, calling the precious metal “a very poor investment” — though still a useful hedge in a diversified portfolio.
Gold remains up about 52% this year and 30% in the past two months.
Prices have been rising over the past few years, supported by heavy central-bank buying, particularly from emerging markets seeking to reduce their reliance on the US dollar after Western sanctions on Russia.
The rally has also been supported by geopolitical uncertainty under the Trump administration and concerns over US debt.
But gold prices started heading sharply lower after hitting their record high, a move that many have been expecting due to the recent rapid runup in prices.
Last week, Goldman Sachs cited speculative unwinds and spillover from the silver market for the slump. Still, the bank expects central banks and institutional investors to boost gold exposure amid global uncertainty. It has a gold price forecast of $4,900 per ounce by the end of 2026.
Gold bulls include Ed Yardeni, a market veteran, who has a $10,000 an ounce call for gold by the end of the decade.
But not everyone is convinced.
Capital Economics predicts that the price of gold will fall to $3,500 an ounce by the end of 2026 as the precious metal heads toward a “mini-bust.”
The research firm also doesn’t expect central banks to keep adding to their gold holdings as the share of the yellow metal in total reserves has surpassed 20%.
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