Gold investors were caught off guard this week when the Netherlands ended a months-long operation to withdraw billions of dollars' worth of bullion from the United States and Canada in preparation for a possible "crisis situation" that could affect global trade.
The Central Bank of the Netherlands, or DNB, did not specify which crisis it was referring to. The main suspects are: wars in Eastern Europe and the Gulf region, a spike in global government bond yields, Japan's worrying interventions in the currency market, and ongoing trade disputes between Washington and the rest of the world.
DNB has moved about 86 tons of gold - valued at about $12.3 billion at current prices - from its storage facilities in New York and Ottawa to London in the past six months. That figure represents around 27% of the 313 tons that the country has deposited in North America, as reported by the central bank.
"Gold deposited at the Bank of England must comply with current international trading standards and is considered the most easily tradable gold in the world, making it the most accessible to DNB in the event of a crisis," the bank said.
"We hope we never have to resort to them, but we must strengthen our resilience and our preparedness," added DNB Governor Olaf Sleijpen.
The New York Federal Reserve still holds about 6,300 tons of gold, the vast majority of which belongs to foreign central banks and international institutions such as the International Monetary Fund. Most of the US reserves are located at the United States Precious Metals Depot, at Fort Knox, Kentucky.
The last official audit of Fort Knox's reserves was conducted in 1953.
Former Treasury Secretary Steven Mnuchin visited the facility in 2017, becoming one of only three treasury ministers to have made such a trip since its founding in 1936. "Glad the gold is safe," he later posted on social media.
Spot gold prices have risen sharply since mid-July, rising nearly 12% to $4,477 an ounce in early trading on Thursday. Gold futures were at $4,523 an ounce.
Although they are still far from the all-time high of $5,589.38 per ounce that gold reached in early January, these data point to a notable improvement in the outlook for the yellow metal heading into the final months of the year.
"The factors that have led traders and investors to return to gold have not disappeared and we believe they are likely to continue to act as support in the coming months," said Ole Hansen, head of commodities strategy at Saxo Bank, in a recent note.
"Among them are concerns about US fiscal sustainability and high debt levels, the prospect of further dollar weakness, central bank demand and continued geopolitical uncertainty," he added.
Wider global tensions - the ongoing war in the Gulf region and the trade dispute between the US and Canada - could be behind the Dutch central bank's decision to keep its gold reserves closer to home.
In fact, global gold purchases by central banks have picked up lately, and the total for the first half of the year has risen to 102 tons, according to data from the World Gold Council.
Gold-backed exchange-traded funds (ETFs) are also increasing their assets, adding $3 billion in July, and funds tracked by Bloomberg last month posted one of their biggest daily gains in nearly a year.
"The gold correction appears to have bottomed out," said Ewa Manthey, a London-based commodities strategist at Dutch investment bank ING. "The rebound in ETF purchases," he added, "and their resilience despite elevated [bond] yields suggests that the recovery is on a more solid footing... but that future gains will depend on whether investment demand continues to rise and how the Fed responds to persistent inflation."
Looking ahead, Hansen and Saxo Bank note that the strength of the US dollar, the Federal Reserve's restrictive stance and easing fiscal concerns could support gold prices, although they caution that other factors will remain present during the autumn months.
Ole Hansen said: "Technically, if the bullish breakout fails to sustain - in particular, if it falls back below the 200-day moving average near $4,519 - the current bullish momentum could weaken."
