Recently, the gold market has ushered in a new round of explosive growth, and gold prices have repeatedly hit new highs. As of February 11, spot gold has risen by $2,911 per ounce, and has risen for six consecutive weeks, up more than 11% this year, and has risen by an astonishing 43.89% compared with the same period last year. This round of epic market has once again made the "golden myth" hot topic in the market.

Tariff storm creates risk aversion

Trump has made frequent tough remarks on trade recently, clearly stating that he would take more radical tariff measures against allies and competitors, which has significantly increased uncertainty in the global market and is behind the second round of gold rally. key drivers.

After Trump's claim, the United States announced a 10% tariff on goods last week and threatened trade relations with Mexico and Canada, it again this week The executive order was signed to impose a 25% tariff on all steel and aluminum imported to the United States, and plans to further expand the scope of commodity tariffs, threatening to impose tariffs on major economies, including Europe and Japan.

The "US priority" tariffs implemented by Trump are triggering structural shocks in the global trade system. The practice of forcing trading partners to make concessions has further escalated global trade tensions and has also heightened investors' concerns about a slowdown in economic growth in the future. The uncertainty in the global financial market is increasing, and in this context, the natural attributes of gold as a safe-haven asset have become the first choice for investors.

In addition, tariffs may trigger an upward trend in inflation pressure. If the United States continues to implement stricter tariffs, commodity and raw materials prices may rise, driving overall inflation higher. This will put the Fed in a dilemma – a trade-off between rising inflation and slowing economic growth. If the Fed chooses to raise interest rates to curb inflation, it may further increase the risk of recession, which in turn will enhance market demand for safe-haven assets and further boost gold prices.

Global central banks continue to increase their positions

Since the Russian-Ukrainian conflict, the United States has frozen Russian central bank assets , as if it is a wake-up call to central banks in various countries. Central banks are beginning to deliberately stay away from dollar reserves and turn their attention to assets that no one can freeze—gold. Since 2022, demand from the central bank has been rising steadily. World GoldData from the association shows that the global central bank net gold purchase volume reached 1,173 tons in 2024, breaking the 1,000 tons mark for the third consecutive year. Among them, 333 tons of gold purchases were purchased in a single quarter in the fourth quarter, the fastest growth rate in 20 years. IMF data shows that the dollar reserve share has dropped from 73% in 2001 to 58%, while emerging market central banks are replacing the dollar with gold as reserve assets. The unipolar status of the US dollar is accelerating and weakening.

Q4 2024 Global Central Bank Purchase Data

It is particularly worth noting that the central bank previously suspended its holdings of gold for 18 consecutive months, and began to resume its increase in holdings after Trump won the election in November last year. The latest data released on February 7 showed that central bank gold holdings increased by 160,000 ounces in January, the third consecutive month of increase. The central bank's current gold reserves are 73.45 million ounces (about 2,284.35 tons), and the proportion of gold reserves among official international reserve assets has risen to 5.53%, but are still far below the global average of 15%.

From the perspectives of optimizing the international reserve structure and promoting the internationalization of the RMB, the central bank's increase in gold holdings will remain the general direction in the future.

Q4 2024 Global Central Bank Purchase Data

Deepening of geopolitical rifts pushes up gold prices from the risk premium dimension

Trump continues to put pressure on the global trade order, and also through diplomacy The statement released a tough signal and threatened many threats, exacerbating global geopolitical tensions.

For a long time, close ties in the global economy have been regarded as the key guarantee for maintaining international stability and preventing conflicts. However, Trump's behavior broke the original balance of economic order, and major economies faced the risk of comprehensive decoupling, which made geopolitical contradictions continue to intensify. In addition, the continued situation in the Middle East and the situation in Russia and Ukraine are also increasing the global risk premium. Investors are increasingly inclined to allocate traditional safe-haven assets such as gold in the complex international situation, further pushing up gold prices.

Will gold prices continue to rise?

The rising prices in the gold market have stimulated the nerves of many investors. Gold is currently at a historical high, Can you still buy it?

The latest data shows that market funds are flowing into the gold market at an accelerated pace. According to data from the World Gold Council, global physical gold ETFs achieved a net inflow of US$3 billion in the first month of 2025. Among them, the European market dominated the inflow of funds, setting the largest monthly inflow of funds since March 2022. As of the end of January, the total asset management scale of global gold ETFs rose to US$294 billion, a record high, with holdings increasing by 34 tons. This reflects to a certain extent the defensive layout of institutional investors on the uncertainty of the global economic situation.

In addition, the trading activity of the gold market is also significantly increasing. In January, the average daily trading volume of global gold reached US$264 billion, a month-on-month increase of 20%. The trading volume on the New York Mercantile Exchange (COMEX) surged by 60% month-on-month, driving the overall trading volume on global exchanges by 39%. Against the backdrop of strengthening gold prices, market investors' demand for gold allocation has increased significantly.

All signs indicate that the gold market is welcoming against the multiple backgrounds of Trump's capriciousness, the rise of global trade protectionism and the strategic adjustment of reserve structure by many central banks. Come a new cycle dominated by risk premiums, and acts as a risk-haven beacon in the ever-changing international economy and game. Many institutions in the market generally expect that strong buying power may drive gold prices to continue to rise in the medium and long term. For example, CICC is optimistic that the gold price is expected to break through the $3,000/ounce mark in 2025.

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