Gold gains push Swiss National Bank to $6.6 billion profit in Q3

ZURICH (Reuters) -The Swiss National Bank (SNB) made a profit of 5.67 billion Swiss francs ($6.55 billion) in the third quarter, it said on Thursday, helped by a big rise in the value of gold.

The central bank made a profit of 4.41 billion francs from its gold holdings, as concerns about the global political situation raised the value of its 1,040 tonnes of the metal.

Bullion, considered a hedge against political and economic uncertainty, has climbed more than 31% this year, hitting multiple record peaks as the U.S. Federal Reserve’s interest rate cut last month combined with safe-haven demand to fuel gains.

Uncertainties about the upcoming U.S. presidential election and rising debt in the United States have driven gold demand as well this year.

The SNB also made a big profit from the more than 700 billion francs it holds in foreign currency holdings.

During the third quarter the SNB posted a profit of 3.08 billion francs from its foreign currency holdings, helped by buoyant stock markets that increased the value of its shares in companies like Apple (NASDAQ:) and AI chip maker Nvidia (NASDAQ:).

The third-quarter profit contrasted with a 12 billion franc loss a year earlier. As a result, the SNB’s nine-month profit rose to 62.5 billion francs, up from 1.69 billion francs in the first nine months of 2023.

UBS economist Alessandro Bee said the SNB was currently in the “goldilocks zone” – where conditions were just right as rising bond and gold valuations, along with buoyant equity markets, boosted profits.

Equity markets rose more than 4% during the quarter, while bonds increased their valuations by around 2.5%. Gold prices increased by 7% during the quarter.

The SNB was now near to the 65 billion franc annual profit level where it could consider making a payout to Swiss national and local governments, Bee said, after heavy losses prevented a payout in the last two years.

($1 = 0.8652 Swiss francs)