Yuekai Securities: Long-term Favorable Factors Supporting Gold Prices Remain in Place

Chief Economist Luo Zhiheng of Yuekai Securities stated that, in the long term, the favorable factors supporting gold prices still exist. The current sharp decline in gold is not a signal of a bull market ending but rather a deep correction during an upward trend. First, global geopolitical risks are becoming normalized, with the Trump administration’s foreign policies increasing conflict frequency and chain reactions, which will continue to weaken the credibility of the US dollar. Second, non-US central banks remain strongly willing to buy gold, likely continuing to push up the central price of gold. Under the new normal of geopolitical risks, increasing gold holdings has become an important choice for non-US central banks to hedge against sanctions risks and enhance financial security. Emerging market central banks are especially active, with significant room for reserve growth. Third, if global economic risks shift from “inflation” to “stagnation,” gold prices are expected to find support. Rising global energy prices directly erode residents’ real purchasing power and may also force monetary policy tightening to suppress demand and curb inflation, potentially leading to economic slowdown or recession. In a “stagnation” environment, the strategic value of gold will become even more prominent.