Gold is not classified as an HQLA!
Should gold’s HQLA status be revisited? Recently, World Gold Council (WGC) published their report, Gold: an HQLA in all but name. In recent months amid trade policy uncertainty, financial markets experienced a decidedly volatile period marked by sharp declines in stock prices, an uncharacteristic selloff in US Treasuries, and a general widening of bid-ask spreads. Against this backdrop, gold confirmed what previous research studies have found: a highly liquid and orderly market that mitigates market risk in a manner often associated with assets classified as High-Quality Liquid Assets (HQLAs). During this period, gold’s volatility, bid-ask spreads, and trading volumes were equivalent to and, in some cases, better than intermediate and long-term US Treasuries. Gold is a globally recognised, highly liquid asset with deep trading markets and a history of serving as a safe haven in times of financial stress. However, under the Ba...