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

[pmbug]

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.

What does the record price of gold tell us about risk perceptions in financial markets?

The European Central Bank (ECB) is the central bank of the European Union countries which have adopted the euro. Our main task is to maintain price stability in the euro area and so preserve the purchasing power of the single currency.

www.ecb.europa.eu

You don't say?

 

[pmbug]

Maybe ECB should be worried about silver....

 

[ClaytonB]

There's no such thing as a "squeeze", just governments that print oceans of money and then balk at the rising price of gold. They made the mess, let them sleep in the bed they have made.

 

[pmbug]

There's no such thing as a "squeeze", ...

In the stock market, a short squeeze is a rapid increase in the price of a stock owing primarily to an excess of short selling of a stock rather than underlying fundamentals. A short squeeze occurs when demand has increased relative to supply because short sellers have to buy stock to cover their short positions.

Short squeeze - Wikipedia

en.wikipedia.org

 

[oyarde]

Silver is a big glut at my wolesaler , not even paying close to spot , could be 10 percent back before long, 1.25 oz back on 90 , less tan spot on .999 and sterling is a joke. Gold one oz eagles and 1/2 oz under one percent over spot.

 

[pmbug]

There is apparently a big disconnect between retail silver and the 1,000 toz London Good Delivery bar supply. Retail is a glut, LGD bars are tight.