Gold still looks good, dollar dropped

They bought over 1,000 tonnes of the precious metal last year, double the average amount purchased in the previous decade, according to a European Central Bank report published on Wednesday.

The authors wrote that global holdings of gold by reserve banks increased to 36,000 metric tons in 2024, close to the record of 38,000 metric tons reached around 60 years ago.

Now, central bank reserves are composed of, on average, the dollar, at 46%, gold, at 20%, other currencies at 18%, and the euro at 16%.

Source – Business Insider

“What we have seen is the change in the motive for safe-haven buying – from being driven by the Middle East uncertainty to the threat and realisation of tariffs,” said Philip Newman, managing director at consultancy Metals Focus.

“Strikingly, gold was rallying as inflation eased, and it looked as though all of our understanding of how gold prices behaved was being challenged,” said independent analyst Ross Norman.

Nicky Shiels, head of metals strategy at MKS PAMP SA, said that while prices could break out towards $3,200, resolution of physical gold dislocations attributed to tariffs and potential structural changes including reduced risk appetite, reduced participation and reduced liquidity are increasingly bearish.

Source – Reuters

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Bear (in finance) – is an investor who believes that a particular security or the broader market is headed downward and my attempt to profit from a decline in stock prices. Bears are typically pessimistic towards a state of any given market or underlying economy.

The US is moving towards sound money movement

“Everything else that could function as money has been saddled with taxes and disincentives,” Jp Cortez explained, emphasizing how the current monetary system traps people in the Federal Reserve’s fiat currency.

“Ten years ago, only a handful of states were considering sound money policies. Last year, more than 27 states introduced over 65 bills related to sound money.”

Source – Money Metals

Sound money – refers to a reliable and stable medium of exchange that maintains its value over time.

Stocks recoiled on Wednesday, while safe-haven gold held near record highs as a nervous world awaited details of U.S. President Donald Trump’s tariff plans and investors fretted about the risks of an intensifying global trade war.

“Whatever’s announced today, I doubt very much will be the framework that’s in place in, say, nine months’ time because we know there’ll be negotiations around this,” Daiwa Capital economist Chris Scicluna said.

“It’s very difficult to predict with any confidence what the ultimate impact is going to be, whether broadly, economically, in terms of rates or in terms of stock markets,” he said.

“Investors are hoping for some clarity, and perhaps the start of the deal-making phase. But tariffs are already weighing on business sentiment, and this will probably feed through into lower global economic activity in the coming months,” said Ben Bennett, Asia-Pacific investment strategist at Legal & General Investment Management.

Source – Reuters