- विज्ञापन -
New Delhi [India]: Amid recent uncertainties in US trade policies and financial markets, a study from the World Gold Council (WGC) suggests that gold is exhibiting traits of a High-Quality Liquid Asset (HQLA). HQLAs are assets that can be quickly and easily converted into cash with minimal loss in value, even during financial crises.
The WGC analyzed gold’s performance over the past six months, including during periods of extreme bond market volatility in April. The findings show that gold’s volatility, bid-ask spreads, and trading volumes have been comparable to, or even better than, those of US Treasuries of intermediate and long-term durations. For example, in early February 2025, when US Treasuries faced an unusual selloff and increased volatility due to tariff news, gold remained largely stable. Similarly, during April 2025, although gold’s volatility increased, it stayed aligned with the 10-year US Treasury and was lower than the 30-year Treasury, with gold prices reaching record highs as a safe-haven asset.
The study states, “Gold’s performance matched or surpassed that of benchmark assets like the 10-year Treasury, highlighting its resilience and liquidity.” On average, gold’s daily volatility was just 0.027%, similar to the 30-year US Treasury at 0.028%. Its intraday bid-ask spreads averaged about 2.2 basis points, slightly wider than the 10-year Treasury but tighter than the 30-year. Moreover, between November 2024 and April 2025, the daily trading volume of gold in the LBMA OTC market averaged $145 billion, nearly matching the $143 billion of 7-10 year US Treasuries during the same period.
Gold has consistently displayed characteristics of an HQLA, such as low volatility, narrow spreads, and high trading volumes, even amid market turbulence. Because it is universally accepted, free from credit risk, and recognized globally, the World Gold Council concludes that gold is uniquely suited to meet the rigorous liquidity standards required for a Level 1 HQLA designation.
