Azerbaijan’s State Oil Fund (SOFAZ) is seeing strong gains from its gold holdings, benefiting from the ongoing rise in global gold prices and generating substantial revenue for the country. The fund’s strategy reflects a wider trend among sovereign investors, who are increasing gold allocations to shield assets from global instability.

SOFAZ, the country’s sovereign wealth fund, was established to manage revenues from oil and gas exports and support long-term economic stability. The fund also plays a key role in financing the state budget and strategic national projects. As of January 1, 2026, gold accounted for 38.2 percent of SOFAZ’s investment portfolio, up from the previous year.

“Gold holdings are managed within the Fund’s approved investment framework, taking into account target allocations and allowable deviation bands,” SOFAZ said in a statement to Euronews. The fund uses gold as a hedge against external shocks, inflation, and broader market stress, aiming to protect capital and reduce exposure to volatility.

Gold prices recently reached record levels, surpassing $5,500 (€4,660) per ounce before falling sharply following the announcement of Kevin Warsh as the next chair of the US Federal Reserve. By Wednesday, prices rebounded to $5,000 (€4,230) per ounce. SOFAZ noted that its decisions on gold investments are guided by the fund’s overall risk-return strategy rather than short-term price movements.

“Gold plays a stabilising role within the Fund’s overall portfolio, and increasing gold holdings reduces sensitivity to adverse market developments, supporting a more balanced strategic asset allocation,” the fund said. Expanding its gold reserves is intended to safeguard Azerbaijan’s strategic financial assets and strengthen resilience amid global economic uncertainty.

SOFAZ began adding gold to its portfolio in 2012, gradually increasing allocations over time. In 2025, the fund purchased 53.4 tonnes of gold, raising total reserves to 200 tonnes. Over the past five years, SOFAZ generated $22.7 billion (€18.95 billion) in investment returns, including the benefits of gold price appreciation and exchange-rate effects.

The fund attributes its ability to navigate market downturns and recoveries to a diversified and resilient portfolio. The equity sub-portfolio, covering both public and private equities, has been a major driver of growth. Since the diversification strategy was launched in 2012, the equity portfolio has increased more than fourfold, delivering a 305 percent return and nearly $10 billion (€8.35 billion) in investment gains.

By combining oil revenues with a diversified investment approach and growing gold reserves, SOFAZ continues to strengthen Azerbaijan’s financial stability, preparing the country for both domestic and global economic challenges.

China is flooding Latin America with low-priced exports, putting pressure on local industries and forcing governments to weigh protectionist measures against Beijing’s growing influence in the region. The surge in Chinese imports comes as US tariffs curb exports to the United States, prompting Chinese businesses to seek alternative markets for cars, electronics, clothing, and household goods.

Latin America, with a population exceeding 600 million and a growing middle class, has become an attractive destination for Chinese exporters. “Latin America has a solid middle class, relatively high purchasing power and real demand,” said Margaret Myers, director of the Asia and Latin America programme at the Inter-American Dialogue think tank. “Those conditions make it one of the easiest places for China to offload excess industrial production.”

The influx of Chinese goods is affecting local businesses. Argentina has seen factory closures and layoffs in its manufacturing sector, which employs nearly a fifth of the workforce. The volume of e-commerce imports, mostly from China, surged 237% in October compared with the same month in 2024, according to government statistics. Claudio Drescher, head of Argentina’s chamber of industry, said the influx of ultra-fast fashion is “deeply worrying” and putting domestic producers under pressure.

Online platforms such as Temu and Shein have accelerated the trend. Temu reported 114 million monthly active users in Latin America in the first half of 2025, up 165% from the previous year. Shein also expanded its user base by 18% over the same period. Consumers are benefiting from lower prices, but local stores are struggling to compete. In downtown Mexico City, shops selling Chinese-made goods have more than tripled in recent years, displacing some long-established retailers.

The car industry is also under strain. Brazil and Mexico, the region’s main vehicle producers, are seeing Chinese electric vehicles gain market share. In Brazil, more than 80% of the 61,615 EVs sold in 2024 were Chinese brands. Mexico imported over 625,000 Chinese vehicles last year, surpassing Russia as the top destination for Chinese exports. While local production remains strong, Chinese companies such as BYD and GWM are building factories in the region to expand their presence.

Trade imbalances are widening. Mexico’s deficit with China reached $120 billion in 2024, while Argentina’s trade deficit rose to nearly $8.2 billion in 2025. China primarily exports manufactured goods to the region while importing raw materials such as copper, lithium, and soybeans. Beyond trade, Beijing has provided $153 billion in loans and grants to Latin America and the Caribbean between 2014 and 2023, compared with roughly $50 billion from the US.

Governments are beginning to respond. Mexico has imposed tariffs up to 50% on certain Chinese imports, while Brazil is increasing duties on electric vehicles and curbing tax exemptions for small parcels. Chile has raised tariffs and introduced a 19% value-added tax on low-value imports. Analysts warn, however, that countries face limits in pushing back without risking economic or political retaliation from China.

“Many countries don’t feel they have the space to resist China’s export surge,” Myers said. “The relationship has become too important economically, despite concerns about competitiveness.”

Gold and silver prices plunged further on Monday, extending last week’s dramatic sell-off after President Donald Trump nominated Kevin Warsh as the next chair of the US Federal Reserve. The nomination intensified debate over the Fed’s future monetary policy and potential political pressures, prompting investors to reassess positions across precious metals.

Spot gold fell as much as 10% in early trading, while silver tumbled up to 16%, following Friday’s historic decline that marked the largest intraday drop on record for the white metal. The sharp retreat reflected how heavily invested markets had become after months of strong gains driven by geopolitical tensions and expectations of easier US policy.

“Crowded one-sided trades unwind. FOMO and chasing the rally are rarely, if ever, a case of economic fundamentals,” said Marcus Dewsnap, head of fixed income strategy at Informa Global Markets. “Reality seems to have caught up with metals markets after a parabolic rise.”

The sell-off was triggered by Warsh’s nomination, which pushed the US dollar higher and forced investors to reprice expectations for interest rates. “The sharp decline on Friday followed news that Trump intends to nominate Kevin Warsh as the next Federal Reserve chair – a development that boosted the dollar and reinforced expectations of a more hawkish policy stance,” said Ewa Manthey, commodities strategist at ING, alongside Warren Patterson, head of commodities strategy.

Gold and silver are particularly sensitive to US rate expectations, as higher interest rates increase the opportunity cost of holding non-yielding assets. A stronger dollar also makes metals more expensive for overseas buyers. While Warsh has expressed support for aspects of Trump’s agenda, including potential rate cuts, markets do not view him as a strong advocate of aggressive monetary easing.

Investor caution has been visible in exchange-traded funds, with silver holdings falling for a seventh consecutive session to their lowest level since November 2025. Futures data show speculators reducing bullish positions sharply, indicating a broader retreat from the sector. ING analysts noted that managed money net longs in COMEX gold fell by nearly 18,000 lots last week, while silver positions also dropped to their lowest since February 2024.

Mechanical factors have amplified market stress. CME Group plans to raise margin requirements on COMEX gold and silver futures after last week’s swings, forcing traders to post more collateral or reduce exposure. “When a market has risen beyond fundamentals, it doesn’t take much to open the exit door,” Dewsnap said. “There aren’t enough buyers to absorb the selling cascade, which exacerbates the drop.”

Attention is turning to Asia, where Chinese investors traditionally support metals prices during dips. However, with volatility high and the Lunar New Year approaching, participation may be cautious. Analysts say short-term direction will depend on dip-buying from Chinese traders.

For now, the precious metals market remains fragile, closely watching US data for clues on real interest rates and dollar movements. Analysts warn that volatility is likely to remain elevated, with macro uncertainty and expectations around Fed policy continuing to dominate sentiment.