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Gold Markets Are Cited by ECB as a Risk to Financial Stability
- The European Central Bank stated today that gold markets pose risks to financial stability amid record-high gold prices and market stress.
- This warning follows gold’s unprecedented surge since 2023 driven by elevated geopolitical risks, trade tensions, and policy uncertainty.
- ECB economists highlighted vulnerabilities such as market concentration, leverage, opacity from OTC derivatives, and delivery difficulties for physical gold.
- They noted that if severe disruptions occur, gold markets might pose risks to financial stability, including potential liquidity challenges triggered by margin calls.
- The ECB said these dynamics suggest potential shocks could propagate through the wider financial system if elevated risks and physical gold shortages persist.
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The European Central Bank Says Gold Markets Can Create Risks to Financial Stability
The ECB is aware of the fact that additional coverage values and the cancellation of advanced positions can create liquidity tensions on the market and the problem can lead to the financial system.
·Portugal
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