Daily Brief – Gold

Gold

With Gold accounting for the second highest proportion of Central Bank reserves after the USD and the mood music shifting to it assuming a greater influence on future reserves management, it is worth looking at the numbers behind that. In the 1960s, Central Banks held the highest amount historically of 38,000 tons of gold. In 2024, after falling for decades that had grown back to 36,000 tons. China, India and Turkey have been the largest buyers recently between them buying 60 tons since 2021. China is one of the largest holders with 2294 tons but China’s gold holdings only make up 7% of their reserves. With the move away from USD which is gathering pace it is not hard to surmise that Central Banks led by China’s PBOC will be buying more gold.

EUR/USD 1.1715.

Defence Spending

Having placated POTUS with Netherlands PM Mark Rutte fawningly addressing him as Daddy, European leaders will now be working out how they will spend the 5% of GDP that they have pledged 1.5% on security and 3.5% on military is the conventional textbook assumption. However, modern warfare as is being played out in Ukraine and was briefly in Iran last week is often conducted remotely. Rather than soldiers and tanks that spend is more likely to be on drones, missile defence, counter drones and surveillance; hence it being dubbed War From Home.

GBP/USD 1.3716.

Oil

With Brent back to $67.77 – what a difference just a week makes – what the world was potentially facing with the closure of the Strait of Hormuz seems a different era. Now the talk is more of a softening global economy reducing demand. With an OPEC+ meeting on July 6, that may be exacerbated by further production increases by the Gulf producers. Production has already been ramped up in 2025 by 1.75 million barrels per day led by UAE increasing by 300,000 bpd. Also contributing to the likely further softening scenario is the continuing peace dividend between Israel and Iran. On the other side, offering some price support is the drop in US oil rigs due to many US producers struggling turn a profit. Overall, the oil price looks capped to dropping as of now.

EUR/GBP 0.8542.

Queuing for England

There are many English traits that puzzle foreigners and the willingness to queue for almost anything is up there. Step forward champion Wimbledon Tennis queue meister Harry Taylor a publican from Bridge, Kent who has been queuing for tickets to the tennis tournament every year since 1992. He’s a pro: tent, mattress and even artificial flowers; he took up position on Friday night and he will be there until July 9 the day of the Quarter Finals.

USD/JPY 144.65.

Born in the USA

Bruce Springsteen managed no less than 6 Top Ten singles from this album released this day in 1984. The promo video shot in St Paul Minnesota showed him playing and then dancing with a young ( too young to buy a drink) actress who became subsequently better known as Courtney Cox whom he pulled out of the audience obv completely spontaneously. Dancing in the Dark she was not:

I get up in the evening
And I ain’t got nothing to say
I come home in the morning
I go to bed feeling the same way
I ain’t nothing but tired
Man I’m just tired and bored with myself
Hey there baby, I could use just a little help

You can’t start a fire
You can’t start a fire without a spark
This gun’s for hire
Even if we’re just dancing in the dark

Message keeps getting clearer
Radio’s on and I’m moving ’round the place
I check my look in the mirror
I want to change my clothes, my hair, my face
Man I ain’t getting nowhere
I’m just living in a dump like this
There’s something happening somewhere
Baby I just know that there is

You can’t start a fire
You can’t start a fire without a spark
This gun’s for hire
Even if we’re just dancing in the dark

I get up in the evening
And I ain’t got nothing to say
I come home in the morning
I go to bed feeling the same way
I ain’t nothing but tired
Man I’m just tired and bored with myself
Hey there baby, I could use just a little help

You can’t start a fire
You can’t start a fire without a spark
This gun’s for hire
Even if we’re just dancing in the dark

Message keeps getting clearer
Radio’s on and I’m moving ’round the place
I check my look in the mirror
I want to change my clothes, my hair, my face
Man I ain’t getting nowhere
I’m just living in a dump like this
There’s something happening somewhere
Baby I just know that there is

You can’t start a fire
You can’t start a fire without a spark
This gun’s for hire
Even if we’re just dancing in the dark

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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