Central banks around the world added a record amount of gold to their reserves in the first half of 2023, as they sought to protect their assets from inflation and geopolitical risks, said Saxo Bank weekly market report issued on Monday.
According to data compiled by the World Gold Council, net central bank gold purchases totaled 387 tons through the first six months of the year, the highest first-half total since the organization began compiling quarterly data in 2000.
China’s central bank was the biggest buyer, adding 195 tons of gold to its reserves, followed by Singapore’s central bank, which added 75 tons. Turkey, meanwhile, turned to be a net seller of gold in the first half of the year, selling 20 tons of gold, the report indicated.
Saxo Bank said that the record gold buying by central banks comes as inflation is rising around the world, and as geopolitical tensions are increasing. Gold is seen as a safe haven asset in times of economic and political uncertainty.
Siemens Energy wind business losses balloon to €4.5bn
Moreover, the report cited that Siemens Energy’s wind business losses ballooned to €4.5bn in the first half of 2023, as the company continued to grapple with faulty wind turbine designs.
The company said on Monday that it had taken a €4.2bn writedown on its wind business, and that it expected to lose another €300m in the second half of the year.
The problems in Siemens Energy’s wind business have been ongoing for several years, and the company has been struggling to fix the faulty turbines. In 2022, the company announced that it would be cutting 3,000 jobs in its wind business.
The loss of €4.5bn in the first half of 2023 is a major setback for Siemens Energy, and it raises questions about the future of the company’s wind business.
Fed members still leaning hawkish
Regarding US Federal Reserve expected monetary policy, Saxo Bank said that some Federal Reserve members are still leaning hawkish, despite the slower job growth data released on Friday.
Fed Governor Michelle Bowman said over the weekend that she believes “more rate hikes will likely be needed” to bring inflation under control.
Meanwhile, Fed Bank of Atlanta President Raphael Bostic and Fed economist Austan Goolsbee said that the labor market is becoming better balanced, but that the FOMC can still afford to be patient.
It remains to be seen how the Fed will respond to the slower job growth data, but it is clear that there is no consensus among Fed members on how to proceed.
Maersk warns of global trade downturn
Danish shipping and logistics group Maersk warned on Monday that it expects global trade to contract in the coming months.
Maersk, the world’s largest owner of container ships, said that it expects global container volume growth to slow to between -4% and -1% in 2023, down from its previous forecast of -2.5% to +0.5%.
The slowdown in global trade is being driven by a number of factors, including the war in Ukraine, rising inflation, and supply chain disruptions.
Maersk’s warning is a further sign that the global economy is facing headwinds.
Global food prices jump higher
Furthermore, the report indicated that global food prices jumped higher in July, as trade disruptions from the El Nino weather phenomenon battered agricultural-producing countries, and Russia’s exit from a crucial UN-backed agriculture deal stoked supply concerns.
The Food and Agriculture Organization of the United Nations (FAO) reported Friday that the global food index, which tracks monthly changes in the international prices of globally-traded food commodities, averaged 123.9 in July, up 1.3% from the previous month.
This was the largest monthly gain since March 2022.
The FAO said that the increase in food prices was driven by higher prices for cereals, sugar, and vegetable oils.
Cereal prices rose 2.3% in July, as the El Nino weather phenomenon continued to disrupt agricultural production in key exporting countries.
Sugar prices rose 4.2%, as drought conditions in Brazil and India reduced sugar output.
And vegetable oil prices rose 3.1%, as the war in Ukraine disrupted exports of sunflower oil from the region.
The FAO warned that the increase in food prices could have a negative impact on food security in developing countries.