A number of Central Banks have begun to add gold to their reserves since Russia invaded Ukraine.
Chart from Alpine Macro. According to the IMF there is about $12 trillion of currency reserves held globally. That is nearly the market value of the gold stock, but according to Alpine Macro only about $3 trillion of gold is potentially available for central banks to purchase. While other factors need to be taken into account, Central banks buying is likely creating a supply/demand imbalance. Source: Crit Thomas, Alpine Macro
Nice chart by BofA showing central bank gold purchases from 2020-2023
Thru Ronnie Stoeferle
Gold is rallying despite retail and institutional investors dumping.
This is bullish. But who is buying by the way? Central banks... Do they know something investors don't know? Source: BofA
Gold's role as a neutral asset with millennia of history as money is experiencing a resurgence relative to US Treasuries for global central bank reserve accumulations.
Source: Tavi Costa, Bloomberg
Central banks cut rates at the fastest pace since heading into the pandemic.
Source: BofA, The Daily Shot
Below central bank holdings of government bonds...
Greece was excluded from ECB QE under Draghi, but was included in COVID QE, giving it a big boost (pink). Greece then undermined the G7 cap on Russia at every turn, protecting its shipping oligarchs at the expense of the EU. If you can't behave properly, there should be no QE... Source; Robin Brooks
SNB cut rates against market expectations
Swiss National Bank cut the policy rate by 25 BPS to 1.50%. USDCHF and EURCHF both jumped by more than one figure to 0.8970 and 0.9780 respectively. Market was only pricing in a 35% probability of this cut.
FED holds benchmark rate, May cut remains unlikely
The US Federal reserve holds benchmark rate in 5.25-5.5% target range. Jerome Powell prepared remarks and Q&A answers were more dovish than during the January meeting. FOMC median forecast remains at 75 BPS rate cuts for 2024, but the forecast increased from 3.6% to 3.9% in 2025.
Gold reacted to Powell's dovish tone by jumping to a new record high and breaking the 2200 level.
Source: Bloomberg
