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European Central Bank Warns Of Gold Risks, World Gold Council Responds

Waleed Farouk Gold had a strong week, closing up 4.5%, driven by a wave of concern in financial markets about the stability of the global bond market amid mounting fears of a worsening sovereign debt crisis. These moves followed two disappointing bond auctions. The first was in Japan, which recorded its worst 30-year bond auction in decades, sending yields above 3.2%. The situation was no better in the United States, where the country held a weak 20-year bond auction, pushing yields to 5%. Unusually, these yield increases did not reflect expectations of strong economic growth. Rather, they were driven by growing concerns about governments' inability to repay their mounting debts, which dampened investor appetite for traditional assets and boosted demand for gold as a safe haven. Gold... An Asset Without Liability Although gold does not offer direct returns, its appeal lies in its status as a globally recognized monetary asset, unlinked to any counterparty or credit risk. Financial institutions such as the World Gold Council and the London Bullion Market Association emphasize the need to classify it as a "high-quality liquid asset," especially in times of volatility and uncertainty. However, this approach has not been without warnings. The European Central Bank recently issued a research paper indicating that a sudden surge in investment demand for gold could pose potential risks to financial stability, especially in the event of extreme economic events. The bank explained that commodity markets, including gold, exhibit structural weaknesses, most notably concentration in a small number of companies, widespread leverage, and increased ambiguity due to heavy reliance on over-the-counter derivatives. Market Responses: Gold Remains Stable Despite the warnings, analysts believe these concerns are exaggerated. In a statement, Joseph Cavattoni, Chief Market Strategist at the World Gold Council, confirmed that the market shows no significant signs of turmoil. In fact, gold has maintained its liquidity and stability over the past months, even during the height of trade tensions and fears of stagflation. Cavatoni said that gold's performance during crises reflects its resilience as a strategic hedging tool. He noted that the gold market is among the largest in the world, with an average daily trading volume of approximately $165 billion, making it the second largest trading market after S&P 500 futures. Gold Returns to the Forefront With rising doubts about governments' ability to manage their debts and eroding confidence in traditional debt instruments, gold appears to be reclaiming its historical role as a safe haven and store of value, especially during times of geopolitical and economic volatility and uncertainty. As investors await future developments in bond markets, gold remains in the forefront as a strategic asset that may be more important than ever. read more CBE: Deposits in Local Currency Hit EGP 5.25 Trillion Morocco Plans to Spend $1 Billion to Mitigate Drought Effect Gov't Approves Final Version of State Ownership Policy Document Egypt's Economy Expected to Grow 5% by the end of 2022/23- Minister Qatar Agrees to Supply Germany with LNG for 15 Years Business Oil Prices Descend amid Anticipation of Additional US Strategic Petroleum Reserves Business Suez Canal Records $704 Million, Historically Highest Monthly Revenue Business Egypt's Stock Exchange Earns EGP 4.9 Billion on Tuesday Business Wheat delivery season commences on April 15 News Egypt confirms denial of airspace access to US B-52 bombers News Ayat Khaddoura's Final Video Captures Bombardment of Beit Lahia News Australia Fines Telegram $600,000 Over Terrorism, Child Abuse Content Arts & Culture Nicole Kidman and Keith Urban's $4.7M LA Home Burglarized Sports Former Al Zamalek Player Ibrahim Shika Passes away after Long Battle with Cancer Sports Neymar Announced for Brazil's Preliminary List for 2026 FIFA World Cup Qualifiers News Prime Minister Moustafa Madbouly Inaugurates Two Indian Companies Arts & Culture New Archaeological Discovery from 26th Dynasty Uncovered in Karnak Temple Business Fear & Greed Index Plummets to Lowest Level Ever Recorded amid Global Trade War Arts & Culture Zahi Hawass: Claims of Columns Beneath the Pyramid of Khafre Are Lies