Benefiting from the surge in gold prices, the value of the Philippine central bank's gold holdings has skyrocketed by 70%, reaching a record high

Driven by the strong rise in global gold prices, the market value of gold reserves held by the Central Bank of the Philippines surged nearly 70% by 2025, reaching a historic high. This sharp increase in asset value not only significantly boosted the country's foreign exchange reserves but also caused its gold holdings to far exceed the ideal range set by officials, raising market concerns about the central bank's asset allocation strategy.

According to data released by the Central Bank of the Philippines on Wednesday evening, the value of its gold holdings climbed to a historic peak of $18.6 billion by the end of 2025. This growth is primarily attributed to the revaluation effect in the precious metals market rather than a simple increase in physical holdings. The central bank did not disclose the specific weight of gold holdings in its report.

Data shows that gold currently accounts for approximately 17% of the total foreign exchange reserves of the Philippines. This proportion significantly deviates from the target range previously set by the country's monetary authorities, bringing the issue of portfolio rebalancing to the forefront. This dynamic highlights the direct impact of last year's commodity market volatility on sovereign balance sheets and also suggests potential adjustments in official reserve management in the future.

Valuation Effect Dominates Asset Appreciation

The surge in the value of gold assets held by the Central Bank of the Philippines directly reflects the trend in international gold prices. Data indicates that gold prices increased by more than 60% over the past year. This price-driven asset appreciation effect is the core factor behind the rapid expansion of the central bank's wealth.

Although the bank did not disclose the specific tonnage of gold, the comparison between the value increase and market price rise clearly shows that revaluation is the main driving force. For emerging market central banks holding substantial physical gold reserves, the rise in gold prices provides significant asset cushioning but also presents challenges in deviating from predetermined asset allocation targets.

Excessive Holdings Raise Concerns

With the rapid expansion in market value, the weight of gold in the Philippines' foreign exchange reserves has surpassed the comfort zone of policymakers. The 17% share by the end of 2025 is significantly higher than the ideal level deemed appropriate by officials.

Monetary Board member Benjamin Diokno stated last October that ideally, the proportion of precious metals should be maintained between 8% and 12% of total reserves. The current actual proportion exceeds this upper limit by about 5 percentage points, which may prompt the central bank to review its reserve composition in the future and assess whether tactical adjustments are needed to return to the target range