The ECB is worried about systemic financial system risk from a squeeze in the gold market

pmbug · May 19, 2025

Bold emphasis is mine:

...
While gold prices are driven by many factors, investors showed high demand for gold as a safe haven asset and, at the beginning of 2025, a notable preference for gold futures contracts to be settled physically. These dynamics hint at investors’ expectations that geopolitical risks and policy uncertainty could remain elevated or even intensify in the foreseeable future. Should extreme events materialise, there could be adverse effects on financial stability arising from gold markets. This could occur even though the aggregate exposure of the euro area financial sector appears limited compared with other asset classes, given that commodity markets exhibit a number of vulnerabilities.[14] Such vulnerabilities have arisen because commodity markets tend to be concentrated among a few large firms, often involve leverage and have a high degree of opacity deriving from the use of OTC derivatives. Margin calls and the unwinding of leveraged positions could lead to liquidity stress among market participants, potentially propagating the shock through the wider financial system. Additionally, disruptions in the physical gold market could increase the risk of a squeeze. In this case, market participants could be subject to significant margin calls and/or have trouble sourcing and transporting appropriate physical gold for delivery in derivatives contracts, leaving themselves exposed to potentially large losses.
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https://www.ecb.europa.eu/press/fin...5/html/ecb.fsrbox202505_02~7f616fcd3f.en.html

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ToughCOINS · May 19, 2025

Folks should not be surprised by this . . . but they will be.

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mpcusa · May 20, 2025

GOLD has always been my favorite investment vehicle also have money in the usual places stocks and bonds, bought allot of GOLD bullion under $1,800 an once so way out in front when it comes to that

fiddlehead · May 30, 2025

Ibid...

GoldFinger1969 · Sep 18, 2026 at 9:44 AM

It appears they are worried about something like the Gamestop situation, but I think that was an anomaly.

We had a big rise in gold after the article was published and everything worked nicely.

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The ECB is worried about systemic financial system risk from a squeeze in the gold market

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The ECB is worried about systemic financial system risk from a squeeze in the gold market

pmbug Taking steps on my thousand mile journey

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