Central Banks are exiting U.S. bonds and moving into gold, says Julius Baer By Investing.com

"Instead of a major surge in demand, the record recovery of gold can be explained by an increase in buyers' willingness to pay, spiced with some speculation," says Carsten Menke, head of Julius Baer's next-generation research.

Menke evaluates that monetary authorities, including the People's Bank of China, would have greater willingness to pay than Western investors, with motivations considered more political than economic, but the shift in direction would be "much less widespread than thought."

Julius Baer believes that the Chinese central bank has been reducing its allocation in American Treasury bonds aiming for less dependence on the dollar, with less willingness to be subject to sanctions. Thus, central bank purchases would support prices at structurally high levels, "but not necessarily push them even higher," according to the specialist's understanding.

The Swiss group sees more downsides than upsides in the medium and long term, but notes that the commodity plays a fundamental role as protection against economic and systemic risks in financial markets.

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