Gold is in high demand as a safe haven. This is all the more true these days, as other supposed safe havens, such as the US dollar and/or US government bonds, have lost their appeal due to the erratic policies of the US government under President Donald Trump, Commerzbank's commodity analyst Barbara Lambrecht notes.
"The ECB has also recently addressed the question of what the record-breaking Gold market is saying about risk perception on the financial markets. The attractiveness of investing in Gold in uncertain times also lies in the fact that there is no counterparty risk (when Gold is held in physical form), while supply is limited and inelastic, which preserves Gold's intrinsic value."
"The ECB notes that investors have recently shown a strong preference for Gold futures with physical delivery. As a result, Gold holdings on the COMEX have risen sharply, according to Bloomberg figures, from the beginning of December to the beginning of April by 150% to a new record high of 45 million ounces."
"Investors in the eurozone are also exposed to Gold through derivatives: their gross notional value has risen by 58% since last November to EUR 1 trillion at the end of March. A significant portion of this is OTC transactions, which always carry heightened risks of counterparty default."