Huatai Securities: Short-term geopolitical changes have not disrupted the medium- to long-term underlying logic of gold.

ME News message. On April 11 (UTC+8), a research report from Huatai Securities noted that since March, geopolitical developments have hit global risk appetite, but gold has not delivered the expected safe-haven performance; instead, it has risen and fallen in tandem with risk assets. Since the US–Israel–Iran conflict broke out in March, the maximum drawdown once exceeded 17%, before rebounding at the bottom as signs of the situation easing emerged. The institution believes the reasons for this round of gold’s adjustment include earlier crowded positioning, liquidity shocks, some central banks selling gold, and the diversion of capital from energy commodities. Looking ahead, in the short term, geopolitical conditions in the Middle East have eased somewhat, and gold is rising together with risk assets—reflecting that monetary policy factors outweigh safe-haven attributes. In the medium to long term, short-term changes in the geopolitical situation have not broken gold’s underlying logic, including the reshaping of geopolitical order, the risk of US debt spiraling out of control, central bank gold purchases, Federal Reserve rate cuts, and the scarcity of safe-haven assets. The pricing framework based on real interest rates plus central bank gold purchases still has some explanatory power. Of course, if the Federal Reserve moves into an active rate-hiking cycle, it could also trigger a sharp adjustment in gold. Overall, gold faces multiple influences in the short term; tail risks are reduced, but amid multiple intertwined factors, volatility remains elevated. Increasing holdings on dips or waiting until volatility converges before taking action may be appropriate ways to respond. (Source: Jinshi)