China-led central bank gold buying spree could stress global markets - SocGen

Commodity

Summary:

SocGen warns that heavy central-bank gold buying—driven largely by China—could strain the physical market and trigger a short squeeze. Opaque reserves data and rising geopolitical uncertainty amplify risks of tighter global gold supply.

Robust physical demand for platinum and silver has highlighted the fragility of global supply chains. While the gold market has not seen the same kind of disruption, it may not be immune to similar volatility, according to one investment bank.

In their latest report, commodity analysts at Société Générale said they are closely watching official-sector gold demand, as they believe ongoing central bank purchases could lead to another short squeeze similar to what was seen in silver and platinum.

Global central banks have increased their gold reserves by roughly 1,000 tonnes in each of the last three years. Although demand is expected to be slightly weaker this year, the World Gold Council forecasts that holdings could still rise by as much as 950 tonnes, well above long-term averages.

Société Générale is issuing early warning signals that this demand for physical metal could put additional stress on a market dominated by paper holdings. The analysts said that even a 1% shift in reserve assets would spark a “gold frenzy.”

They added that China will continue to dominate the gold market.

“If instead of our previous assumption of central banks selling US assets and diverting a small proportion into gold, we could, alternatively, assume that central banks reallocate an additional 1% of their total reserves into gold and do not sell foreign assets,” they said. “China alone would require 276t alone but if we sum across all countries represented, we arrive at a very significant 762t of total flows. If we take that 762t and spread it over a three-year horizon, this will equate to 64t a quarter, almost the same level as under the assumption that foreign holders reduce their exposure to US assets, that is central to our gold forecasting model.”

SocGen’s latest comments come as official-sector gold demand continues to attract significant market attention. Analysts note that global central bank gold purchases have helped create substantial value in the gold market, establishing new support levels at each major breakout.

Analysts expect that growing economic and geopolitical uncertainty will continue to prompt central banks to diversify their holdings into gold. At the same time, America’s ongoing trade war has pushed many nations to reduce their reliance on the U.S. dollar and move into an asset with no third-party or geopolitical risk.

Although central bank demand remains robust, the World Gold Council notes that 66% of official purchases in the third quarter have gone unreported. Because central bank demand is often opaque, analysts must estimate buying using a range of data sources.

SocGen is monitoring central bank demand through U.K. trade data.

“Data released on 13 November, which includes September activity, pointed to an increase in export activity of 55.4 tonnes, which is 15 tonnes below the same month in 2023 and 70 tonnes below the seasonal norm. As prices declined in the latter half of October, this provided a better entry point for central bank buying, so we would expect export activity to have picked up (and a reduction in LBMA tonnage) last month. Seasonally, on average, there are 140 tonnes of exports out of the UK to all destinations in the month of October. We will have to wait until 12 December to see that data,” the analysts said.

SocGen has also seen a slight slowdown in U.K. gold exports to China.

“Total UK gold export data includes exports to China, and the HMRC dataset reports 15t of gold exports to China in September, up from 10t in August. However, September has seen an average of 47t of exports out of the UK into China (2022–2024). September’s export number is the lowest level going back to 2022. Seasonally, we would expect exports to reach 60t in October,” the analysts said.

While China imported 10 tonnes of gold from the U.K. in September, it reported only a 1-tonne increase in its official reserves.

According to the Financial Times, SocGen estimates—based on trade data—that China’s total purchases could reach as much as 250 tonnes this year, or more than one-third of total global central bank demand.

Source: kitco

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Michelle

Commodity

Economic

Russia expects to reach its OPEC+ oil production quota by the end of 2025 or early 2026, according to Deputy Prime Minister Alexander Novak.

"I think this (will happen) in the next few months, maybe by the end of the year or early next year. We'll see how companies do," Novak told reporters on Wednesday when asked about the timeline for meeting the quota.

Russia's current quota for November stands at approximately 9.5 million barrels per day.

Novak indicated that Russia is steadily increasing oil production in November, with the growth rate slightly exceeding that of October. Last month, the country fell short of its quota by 70,000 barrels per day.

The Russian government has maintained its forecast for liquid hydrocarbon production at 510 million tons for the current year, according to Novak.

He also stated that U.S. sanctions imposed in October against Russian oil giants Rosneft and Lukoil have not affected oil production in Russia. These sanctions were implemented in response to stalled peace talks regarding Ukraine.

Novak confirmed that Russia has fully completed compensating for its previous oil overproduction under the OPEC+ agreement and does not plan to voluntarily reduce output.

Source: Yahoo Finance

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Adam

Cryptocurrency

The asset once expected to “go to the moon” is struggling to keep pace with Treasuries. Bitcoin (BTC-USD) has fallen nearly 30% from its 2025 peak, lagging behind everything from tech stocks to T-bills.

Once promoted as a high-growth play, an inflation hedge, and a portfolio diversifier, the world’s largest cryptocurrency now faces the prospect of ending the year in the red — without fulfilling any of those roles.

Gold — often dismissed by Bitcoin believers as outdated — is easily outperforming the token, which the crypto faithful have dubbed digital gold. So are long-term bonds and the Nasdaq, in a year defined by falling interest rates and shrinking risk appetite.

The underperformance is even starker against benchmarks Bitcoin was supposed to outclass. The MSCI Emerging Markets Index is up sharply this year, and even the US Utilities Index — a byword for low-volatility, low-growth stability — has outpaced Bitcoin’s slide.

Great Bitcoin Crash of 2025 Has It Lagging Bonds, Gold_1

On Tuesday, Bitcoin briefly dipped below $90,000 — roughly the average entry price of all ETF inflows since their launch — meaning the typical ETF investor was, for a while at least, underwater. The largest cryptocurrency climbed off the seven-month low to trade about 1.5% higher to $93,241 as of 11:46 a.m. in New York.

For many, this was supposed to be crypto’s breakout year. A pro-crypto White House, new rules allowing launch of exchange-traded funds across tokens, and a wave of institutional inflows had seemingly secured digital assets a place in mainstream finance. Instead, for investors who bought near the highs, Bitcoin’s 2025 story feels familiar: a burst of euphoria, a crash, and growing disbelief.

Once pitched as everything from an inflation hedge to a growth engine and an uncorrelated store of value, the token has fallen short on every count of late. Volatile? Always. Reliable? Less and less.

That matters for professional investors. In diversified portfolios, Bitcoin has failed to offset losses from tariff-driven selloffs or amplify gains during rebounds. Nor has it acted independently when other markets turned volatile. For fund managers who saw crypto as a strategic addition, the disappointment goes beyond performance — it cuts to purpose.

Great Bitcoin Crash of 2025 Has It Lagging Bonds, Gold_2

Theories about what went wrong vary. Some blame October’s violent crash, which erased roughly $19 billion in leveraged positions and left deep psychological scars across the market. “10th October is definitely a longer lasting shock to the market than it appears on the surface,” said George Mandres, senior trader at XBTO Trading. “As much as market participants will try to forget or brush it off, it will remain deeply embedded in the appetite of market-makers to provide liquidity and in market participants’ conviction and risk appetite.”

Others point to broader market weakness. “Asia printed softer growth data overnight, Chinese equities weakened, and global tech valuations retreated as investors reassessed pricing ahead of Nvidia’s earnings on November 19,” said Timothy Misir, head of research at digital asset analytics firm BRN. “With liquidity conditions already thin, correlations snapped back to their high-beta defaults. Crypto traded not as a hedge, but as the most leveraged expression of macro tightening.”

Great Bitcoin Crash of 2025 Has It Lagging Bonds, Gold_3

“Talks of an incoming bear market are starting to ring louder and louder,” said Augustine Fan, a partner at SignalPlus.

To be sure, Bitcoin still trades well above levels seen before Donald Trump’s re-election, and its history is filled with sharp declines followed by spectacular recoveries. Over longer horizons, returns remain impressive. But for now, traders are positioned defensively. Demand for downside protection around the $85,000 and $80,000 levels has surged, and options data suggest less than a 5% chance of Bitcoin revisiting its record high above $126,000 by year-end, according to data from Coinbase-owned Deribit.

Source: Bloomberg

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Warren Takunda

Economic

The pound to euro exchange rate (GBP/EUR) is back under pressure in midweek trade, with analysts pointing to soft inflation data for the move.

The pair trades 0.20% lower on the day at 1.1326, having been as high as 1.1369 on Monday, suggesting a relief-style rebound having run out of impetus.

A catalyst for the midweek weakness is a slowdown in domestic inflation, with the ONS reporting

prices rose 3.6% y/y in October, down from 3.8% in September. Softening in core inflation (where monthly prices rose at 0.3% m/m vs. 0.4% expected) adds to the sense inflation is coming off recent highs.

And that means one thing: the Bank of England can safely lower interest rates further without those cuts stoking inflation.

And a lower Bank Rate translates into lower short-term bond yields, which mechanically weighs on the pound. Pound to Euro Rate Back Under Pressure_1

Pound to Euro Rate Back Under Pressure_1

Above: GBP/EUR is trending in a downside channel.

The government and Bank of England will be happy about the direction of travel:

"Momentum in core inflation is close to pre-2022 averages. At 2.7% 3m/3m-annualised SA in October, this has been on a downward trend for five months, from a local peak of 4.2% in May," points out Jack Meaning, an economist at Barclays.

"Overall, today's data leaves our view of the likelihood of a Bank of England cut in December little changed," he adds.

Looking to next year, further rate reductions become possible as inflation should continue to ease, say economists.

A further softening in rate cut expectations should, on balance, keep pound-euro under pressure.

"Looking ahead, inflation is likely to remain at similar levels over the final months of this year, but several factors should pull the headline rate down through next year,” says Edward Allenby, Senior Economist at Oxford Economics.

Pound to Euro Rate Back Under Pressure_2

Above image courtesy of Berenberg.

The government can do something to help. There's talk about lowering energy bills through VAT cuts and green levy reductions.

Some economists suggest this could knock half a per cent off headline inflation next year.

Stinging tax hikes are meanwhile set to be announced next week, which should squeeze some excess out of the economy and also contribute to lower trends.

The stronger pound relative to the dollar is also helping, says Allenby:

"The energy category starts to drag on inflation in H1 2026. We think food price inflation has probably passed its peak, with the impact of weaker food commodity prices and stronger sterling set to weigh on the category next year."

Meanwhile, services inflation, the most stubborn component of the inflation basket, is expected to ease steadily due to cooling pay growth and strong base effects caused by this year's increase in national insurance contributions.

The market currently sees a rate cut in December and another cut in the first half of next year, taking the terminal rate to 3.5%.

However, quicker progress on inflation can lower the floor, keeping pound exchange rates under pressure.

Source: Poundsterlinglive

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Adam

Economic

The Dutch government on Wednesday said it suspended its intervention at Chinese-owned chipmaker Nexperia, following constructive talks with Chinese authorities.

“We see this as a show of goodwill,” Dutch Economy Minister Vincent Karremans said in a statement, posted on social media platform X.

In a separate letter to parliament, Karremans said it had become clear Beijing now appeared to be permitting companies from European and other countries to export Nexperia chips, adding that “this is an important step.”

The development appears to bring an end to a bitter dispute between the Netherlands and China, one that had prompted global automotive groups to raise the alarm over a worsening chip shortage.

The Dutch economic affairs ministry said the country considered it to be “the right moment to take a constructive step” by suspending the order under the so-called Goods Availability Act. It added that it would continue to hold talks with Chinese authorities over the coming weeks.

CNBC has reached out to Nexperia, which is based in the Netherlands but owned by the Chinese company Wingtech, and the Chinese embassy in the U.K. for comment.

The situation involving Nexperia began in September, when the Dutch government invoked a Cold War-era law to effectively take control of the company. The highly unusual move was reportedly made after the U.S. raised security concerns.

In making the decision, the Dutch government cited fears that technology from the company — which specializes in the high-volume production of chips used in automotive, consumer electronics and other industries — “would become unavailable in an emergency.”

China responded by blocking exports of the firm’s finished products.

Shares of Europe’s auto giants were trading mixed on Wednesday morning. Milan-listed Stellantis , the parent of Jeep, RAM, Dodge and Chrysler, rose 0.7% on the news.

Germany’s Volkswagen , Mercedes-Benz Group and BMW, meanwhile, were all trading marginally lower at 9:48 a.m. London time (4:48 a.m. ET).

Source: cnbc

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Glendon

Cryptocurrency

The cryptocurrency market is under pressure as traders feel the heat with Bitcoin (BTC) struggling to recover, along with Ethereum (ETH). With more than $1 trillion lost in value over the past six weeks, there have been concerns of a broader correction. Weakness in tech valuations, coupled with uncertainty over U.S. interest rate policies, has triggered broad-based selling across speculative assets.

Bitcoin slipped to $89,000 earlier today to indicate a 43-day correction, similar in duration to the drawdown in April 2025, though that lasted nearly twice as long. The top cryptocurrency currently trades at $91,591.91 with a 24-hour volume of $74.33 billion, according to CoinMarketCap.

Ethereum is also under pressure, trading just above $3,000. As of writing, the cryptocurrency was trading at $3,085.78 rising 1% in the past day, down 23% monthly.

Altcoins on the other hand are having mixed performance during these volatile conditions. XRP stands at $2.14, BNB at $923.12, and Solana at $138.96, with all three up a small amount today but still down 5–13% on the week. The total cryptocurrency market capitalization stands at $3.1 trillion, with 24-hour trading volume around $163 billion.

Bitcoin-led market dynamics

CoinMarketCap data further shows Bitcoin still rules the crypto market, making up 58.3%, while Ethereum holds 11.8%, and all other coins share 30%. The current market drop is mostly driven by Bitcoin, but altcoins are starting to steady. Investor sentiment remains very cautious, with the Fear and Greed Index at 16, showing deep fear in the market.

Market Overview, Source: CoinMarketCap

Moreover, the Altcoin Season Index sits at 29, showing altcoins are trailing while Bitcoin grabs the most market attention. ETF activity is mixed: recent weeks saw outflows, but November 18 brought $4447 million outflows in crypto ETFs, hinting at lower institutional interest due to ongoing market swings.

Perpetual Futures markets show heavy trading, with $788.57 billion and 4.35 billion in open interest. Bitcoin's implied volatility is 53.17, Ethereum's 78.25, signaling high market risk. As analyst Bull Theory noted in his thread on X, Bitcoin's movements mostly drive altcoin declines, but signs suggest altcoins may start stabilizing soon.

Altcoins hold strength amid bitcoin sell-off

Analyst Bull Theory offered more insights on unusual altcoin behavior during this correction. He explained, "BTC breaking below $90,000 for the first time in ~7 months should have destroyed altcoins. But this time, alts are not collapsing with $BTC."

According to the analyst's thread, structured institutional selling drove the initial BTC drop, followed by panic selling from retail traders. However, altcoins had already reached sellers' exhaustion, which prevented broader collapse.

He added, "Normally during a BTC crash, dominance spikes as traders run into BTC for safety. But right now, dominance is below the 50-week EMA. BTC dumping while dominance falls means alts are not being abandoned."

ETH/BTC recently lost its 50-week EMA but is now attempting recovery. This trend, combined with stronger altcoin performance, indicates that selling pressure is concentrated in Bitcoin, suggesting the market may be approaching a bottom.

Ethereum technical overview

Ethereum is still under pressure according to TradingView data on a 24 hour chart. Its price recently moved between $2,989 and $3,123. Technical indicator Bollinger Band, shows that volatility is shrinking and the trend is downward.

Ethereum 24 hour chart, Source: TradingView

Bollinger Bands shows price volatility using a moving average with upper and lower bands; wider bands mean higher volatility. Ethereum's price is staying near the lower band hence, it signals that selling pressure is still strong and buying interest remains weak.

MACD readings stay negative, indicating dominant bearish momentum. The indicator usually shows trend and momentum by comparing two moving averages; crossovers signal potential buy or sell opportunities, with histogram indicating strength.

Crypto analyst Crypto Patel shared insights on Ethereum, saying, "$ETH has locked in a downside BOS at $2,943 & Smart money is now pulling price into premium for mitigation. Next draw on liquidity: FVG $3,270–$3,363." Meanwhile, MACD indicators stay in negative territory, showing ongoing bearish momentum. Past recovery attempts couldn't break the middle Bollinger Band, highlighting sellers still control the market.

Bitcoin and Ether are still facing tough times, but some altcoins are holding up better than expected. Big investors mostly sold Bitcoin, leaving altcoins less affected. This pattern suggests the market might be getting closer to the end of this correction.

Source: CryptoSlate

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Justin

Forex

Economic

Financial plumbing becoming news is rarely a bullish signal. The head of the New York Federal Reserve last week called in the big institutions for an unscheduled meeting prompted by spikes in its standing repo facility — the central bank's money-market backstop.

While that brainstorming put monetary liquidity in the spotlight, the unspoken concern was leverage, especially borrowing by hedge funds.The proliferation of multi-pod hedge funds has brought about a major increase in their share of government bond trading globally.

Their use of leverage and low regulatory oversight make them potentially unstable counterparties and so threaten the stability of the benchmark markets for all other financial assets. There's been much hand-wringing over the scale of the US Treasury bond futures basis trade — a relative-value bet between a cash bond and its equivalent futures contract — but US authorities have done little to address it.

But there is a beacon of hope, and — importantly — nuance, emerging from one unlikely source: The Bank of England. The UK central bank seems to recognize whacking on more onerous regulations isn't the way to reduce systemic risk.

For example, the bank's Financial Policy Committee notes five hedge funds constitute 80% of sterling interest-rate derivatives trading, which has an umbilical financing link to the repo market. That seems crazy, but the solution is not to slam on the brakes — it's to let the trades gently unwind. Victoria Saporta, BOE executive director for markets, acknowledged in a speech on Nov. 7 in Frankfurt that hedge fund activity in the gilt market is putting upward pressure on repo rates. I warned about this in February, and it's been a full year since the BOE's system-wide exploratory scenario was published. However, wheels are finally turning.Lee Foulger, BOE director for financial stability, strategy and risk, made clear in a Nov. 12 speech that \He focused on two initiatives to counteract hedge fund dominance: Mandatory centralized repo clearing and minimum haircuts (or margining) on repo trades that are settled bilaterally. The revelation was that clearing should be tailored specifically for differing risk profiles and liquidity needs. Furthermore, he implied a one-size-fits-all approach to haircuts could easily impair liquidity for no discernible benefit, just making trading more expensive.

Slamming big margins on trades when there is a rush to unwind risk is highly likely to exacerbate a potential crisis. Similarly, cramming all trades into a centralized clearing funnel is too crude a solution. Finally, a major regulator has acknowledged that regulation can be too much of a good thing. It undoubtedly helps that Governor Andrew Bailey is also the new head of the Financial Stability Board, the global central bank forum, so the message can be uniform.

There's no longer any escaping volatility in repo markets. The Bank of Canada and the BOE have both remarked that up to half the volume in government bond auctions and repo markets is from hedge funds. The International Monetary Fund has expressed concern repeatedly. European Central Bank Executive Board member Isabel Schnabel highlighted on an X thread that even in the constrained euro government bond markets, hedge funds account for half of electronic bond trading volume.

Improving market functioning takes clear signaling from regulators, but a sensible global consensus could do a lot of heavy lifting and speed up insight into dark corners. Banks since the 2008 financial crisis have been onerously overregulated, whereas hedge funds have amazingly escaped anything like the same scrutiny — even after occasional blowups (See Archegos).Central bank regulators have to appreciate the differences between systemic risk and market arbitrage that helps finance national governments. If US Treasury cash bonds trade cheaply versus futures, then the system is simply working to exploit that anomaly. Repos act as the systemic lubricant but cross-counterparty exposure needs constant improvement to avoid another Lehman Brothers Holdings Inc. implosion.

Regulatory roadblocks thrown up out of panic or misunderstanding risk making trading more expensive and crimping liquidity. The BOE is onto something — others should listen.