International gold prices have recently surged to new historic highs amid ongoing debate. This seemingly irrational exuberance is, in fact, the result of converging long-term structural forces. We should not focus merely on daily price fluctuations but must look beyond the surface to probe a fundamental question: what does it signify when gold, a non-yielding asset, retains its allure in a low-interest-rate environment and even demonstrates strength during periods of high interest rates? The gold market is currently undergoing a profound structural transformation. To grasp this, we must first correct a long-standing misconception: that gold prices are primarily determined by inflation expectations or real US dollar interest rates. This traditional pricing model has repeatedly failed in the global financial landscape since 2022. For instance, during periods when the Federal Reserve aggressively raised interest rates and real US dollar rates climbed significantly, gold prices not only failed to decline but instead displayed surprising resilience. Behind this "anomalous" phenomenon lies the consistent influx of global central banks acting as "steadfast buyers." Since 2022, annual net purchases of gold by central banks worldwide have remained at historically high levels. These acquisitions are far from being short-term speculative bets; they represent strategic asset reallocation, reflecting deep-seated concerns about the US dollar-centric unipolar reserve currency system. The rise in gold purchases by central banks is closely linked to a "quiet earthquake" currently reshaping the international monetary system. The US dollar-dominated framework established after the collapse of the Bretton Woods system now faces multiple structural challenges. Intensifying major power competition, along with the implementation of strategies like "de-risking" and "friend-shoring," is profoundly impacting the previously globalized economic and financial networks. Against this backdrop, the logic behind many central banks increasing their gold holdings becomes clear: gold is the sole reserve asset without counterparty risk. It is not a liability of any single nation and is not directly susceptible to financial sanctions from any country, making it the ideal cornerstone for building a "de-dollarized" reserve system. This process is not a simple rejection of the US dollar's status but a natural outcome of the international reserve system's evolution from unipolarity towards multipolarity or "bloc-ization." The current driving logic of the gold market now exhibits a clear dual structure, which determines the price characteristics across different time horizons. From a short-term (trading) perspective, the market remains sensitive to traditional indicators. Expectations surrounding Federal Reserve policy, unexpected fluctuations in inflation data, technical movements of the US dollar index, and risk sentiment in the US stock market continue to cause daily price volatility. These factors dominate gold's short-term attractiveness as a financial asset within investment portfolios. From a medium- to long-term (structural) perspective, an entirely different set of factors dictates gold's trend. The intensity of geopolitical conflicts, the progress of global supply chain restructuring, the sustainability of monetary policies in major economies, and the pace of the aforementioned central bank reserve diversification constitute the "signal" for gold's long-term trajectory. While this logic does not signify a return to the gold standard in its original intent, its core involves an assessment of the long-term credit foundation of mainstream fiat currency systems. The severe challenge of the "Triffin dilemma" facing the US dollar in a deglobalizing world positions gold to play the role of the "ultimate settlement asset" and a "systemic risk hedge." A closer examination of the current market participants reveals how this structural shift is unfolding at a micro level. The gold market has diverged into three distinct categories of "steadfast buyers," who collectively shape the new supply-demand dynamics. The first category consists of central banks, particularly those in emerging economies. Their purchases represent non-price-elastic reserve asset accumulation, meaning they do not halt buying due to high prices and may even accelerate positioning increases amid heightened geopolitical tensions. The second category comprises allocation-focused institutional investors, such as certain sovereign wealth funds and family offices. Their strategy involves maintaining a fixed allocation percentage for "non-correlated assets" or "catastrophe hedging" within their portfolios, followed by periodic rebalancing. The third category includes new marginal buyers, such as private companies issuing fiat-pegged stablecoins. To back the value of their stablecoins, these entities purchase and hold substantial physical gold, creating a novel demand that bridges the digital currency world with physical bullion. These three buyer groups share a common trait: they buy and hold, rarely engaging in short-term trading. Their presence effectively locks away a significant portion of the physical gold supply from the market over the long term, altering the market's liquidity structure. This makes gold prices more sensitive to marginal changes in demand and more prone to "short squeeze" type rallies. Looking ahead, the trajectory of gold will be deeply intertwined with the evolutionary path of the international monetary system. As the US dollar's relative dominance wanes, gold, major sovereign currencies (USD, EUR, CNY, etc.), and Special Drawing Rights (SDRs) will collectively serve as reserve assets. Within this "multi-anchor" system, gold's unique value will be highlighted like never before. It will act as the "common denominator" for value conversion between different currency "blocs" for central banks and serve as the "ultimate means of payment" during crises. For investors, this necessitates a paradigm shift in thinking. Analyzing gold can no longer rely solely on US economic data and Federal Reserve meeting minutes; it requires a broader, more diverse analytical framework. This framework must incorporate geopolitical risk assessment, global debt sustainability analysis, and the degree of coordination (or lack thereof) in monetary policies among major economies. In the face of gold repeatedly reaching new highs, we must coolly re-examine its most fundamental attribute. Gold is not a productive asset that generates cash flow; it does not inherently create value. Its price measures the degree of failure in global governance systems, the scale of the strategic trust deficit among major powers, and the depth of the sustainability crisis in the debt-driven growth models of some advanced economies. Behind the headlines of gold hitting new record highs lies far more than just fluctuating numbers; it signifies the global monetary power structure seeking a new equilibrium. The current dynamics in the gold market have long transcended mere bullish or bearish trades, instead serving as a harbinger of the future international financial order.
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