According to a research report released by Sinosol Securities, in the near term, close attention should be paid to the Federal Reserve's balancing act between energy and core services inflation, as well as how U.S.-Iran tensions after the midterm elections affect oil prices, interest rate expectations, and liquidity.
The long-term allocation value of gold still depends on the continued erosion of fiat currency credibility caused by deficit expansion and debt accumulation in developed countries. Whether AI can improve productivity and fiscal sustainability will influence the pace at which this logic materializes. If subsequent wars intensify and oil prices spike but fail to push rate hike expectations further up, then falling real rates and safe-haven demand may once again provide support. In this scenario, if gold still declines due to deleveraging and cash demand, it is more likely to enter a mid-term bottoming area, offering opportunities for long-term allocation.
Key viewpoints from Sinosol Securities are as follows:
Gold has recently declined in tandem with U.S. stocks, while U.S. Treasury yields have pulled back, reflecting differences in the safe-haven logic and capital attributes of different assets. Gold is both a long-term reserve asset and a highly liquid financial asset. When AI-related stock markets fall in unison and localized deleveraging pressure rises, investors may sell gold to replenish margin and cash, causing short-term funding conditions to outweigh long-term safe-haven logic.
The U.S. dollar index has not strengthened significantly, which is not yet enough to rule out localized liquidity pressure. Potential yen intervention could also interfere with this signal, but confirmation is still pending. U.S. Treasuries and gold hedge against different risks. Treasuries benefit more directly from growth concerns and declining risk appetite within the dollar system, while gold absorbs more concerns about the credibility of the dollar system itself.
Current market doubts about AI mainly focus on investment returns and tech stock valuations, and have not yet fully extended to the overall financing capacity of the United States. Funds can therefore sell tech stocks, buy Treasuries, and remain within the dollar system. Only when concerns about insufficient AI returns further transmit to financial stability, fiscal burdens, and policy responses may gold's value in hedging dollar credit risk become more prominent.
There is no fixed one-way relationship among war, oil prices, and gold. Escalating conflict may increase safe-haven demand, but it may also strengthen monetary tightening expectations through energy inflation, constraining gold prices. Gold's 3-month implied volatility has fallen to about 24%, at the 64th percentile over the past year, indicating that volatility expectations have cooled somewhat, but this is not yet enough to confirm a price bottom.
In the near term, close attention should be paid to the Federal Reserve's balancing act between energy and core services inflation, as well as how U.S.-Iran tensions after the midterm elections affect oil prices, interest rate expectations, and liquidity. The long-term allocation value of gold still depends on the continued erosion of fiat currency credibility caused by deficit expansion and debt accumulation in developed countries. Whether AI can improve productivity and fiscal sustainability will influence the pace at which this logic materializes.
If subsequent wars intensify and oil prices spike but fail to push rate hike expectations further up, then falling real rates and safe-haven demand may once again provide support. In this scenario, if gold still declines due to deleveraging and cash demand, it is more likely to enter a mid-term bottoming area, offering opportunities for long-term allocation.
Risk warnings: Inflation, war, and monetary tightening exceeding expectations; cross-market deleveraging exceeding expectations; AI investment returns and productivity boosts exceeding expectations.
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