The rise in gold prices is relentless; today it broke through $5,600 per ounce. What is the logic behind this?

· Global liquidity shift: Major central banks are transitioning from tightening to easing monetary policy, boosting the appeal of gold as a store of value.

· Global 'de-risking': Central banks, institutions, and individual investors are increasing their gold holdings to hedge against extreme risks.

· Diversification of reserves away from the dollar: Emerging market central banks (such as those in China, India, Turkey, etc.) continue to increase their gold holdings to reduce dependence on the dollar and counter the risks of Western financial sanctions.

· Data support: Since 2022, annual gold purchases by global central banks have continuously reached historical highs, forming structural support.

· U.S. debt expansion: The scale of U.S. national debt has surpassed $34 trillion, raising questions about fiscal sustainability and weakening the dollar's credibility, highlighting gold's monetary attributes.

· Reconstruction of the international monetary system: Many countries are exploring cross-border trade settlement in local currencies, elevating gold's status as the 'ultimate anchor asset.'

· Demand for inflation hedging: Although inflation has eased, long-term inflation expectations remain above pre-pandemic levels, drawing attention to gold's value as a physical asset hedge.

· Asset rotation effect: Increased volatility in stock and bond markets is driving capital into gold ETFs and other allocation tools.

· If the U.S. economy weakens, expectations for interest rate cuts will strengthen, favoring gold; if the economy overheats, a rebound in inflation may delay rate cuts, temporarily suppressing gold prices but not altering the long-term risk-averse logic.

· Acceleration of multipolarity, the weaponization of trade protectionism, technological blockades, and financial sanctions are pushing non-political assets (gold) to become 'neutral.' After a substantial short-term rise in gold prices, speculative long positions may become crowded, necessitating caution against liquidity shocks.

· The foundation for a structural bull market is solid: Trends such as de-globalization, debt monetization, and central bank gold purchases are hard to reverse, and the return of gold's monetary attributes may continue.

Gold price increase = expectations of interest rate cuts (monetary) + central bank gold purchases (structural) + geopolitical risks (events) + dollar concerns (credit)

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