What Is Behind the Surge in Gold Prices and Has It Peaked Already? (AI Translation)

【周刊提前读】黄金暴涨探源：动能何在？是否筑顶？

In the past month, global gold prices have surged, marking a significant bull market trend. The domestic spot price of "Thousand Pure Gold (Au99.99)" on the Shanghai Gold Exchange witnessed a nearly 15% increase, climbing from 480 yuan/gram to 568 yuan/gram. Similarly, international markets observed a rise in "London Gold" prices from $2044/ounce to $2394/ounce, an over 16% increase [para. 1]. This surge has also sparked an increase in offline gold trading, particularly noted during the Qingming holiday period at major gold markets like Beijing Caibai and Shenzhen Shuibei, where gold jewelry prices exceeded 700 yuan/gram [para. 2].

The financial markets reflected this bullish sentiment with heightened activity in gold-linked financial derivatives and futures trading. For instance, the main gold contract on the Shanghai Futures Exchange saw its volume and price significantly rise [para. 3]. Gold ETFs and funds related to gold stocks have outperformed other investment classes such as the Shanghai Composite Index and government bonds [para. 4]. Analysts attribute this trend to adjustments in real estate and stock markets over the past two years, leading to a reinforced perception of gold as a valuable asset for preservation and appreciation among retail investors [para. 5].

Gold's performance has been notable against rising U.S. Treasury yields, showing signs of decoupling from traditional indicators like U.S. Treasury yields and the U.S. dollar index [para. 6]. Historically, gold prices have generally moved inversely to these indicators due to its attributes as an inflation-resistant commodity with hedging properties against risks [para. 7]. Despite expectations that rising U.S. Treasury yields would be bearish for gold prices, both have moved in tandem since March 8 [para. 8].

Central banks' robust purchases of gold for reserves diversification amid geopolitical risks have supported high gold prices despite potential impacts from other market factors like U.S. Treasury yields [para. 9]. However, some analysts caution that while central bank purchases contribute positively to gold's price dynamics, a correction may still be forthcoming given current high prices [para. 10].

The domestic market has seen fluctuations influenced by regulatory warnings about investment risks following rapid price increases and speculative activities around certain ETFs [para. 11]. Global factors such as the United States' CPI data release also momentarily affected gold prices but were followed by a rebound demonstrating resilience amidst volatility [para. 12].

Since July 2022, both domestic and international markets have experienced substantial gains in gold prices with sharp rises observed since March due to various factors including Federal Reserve rate cut expectations and geopolitical tensions without being deterred by rising U.S. Treasury yields or dollar strength which traditionally would exert downward pressure on gold prices [para. 13][para. 14].

Analysts suggest that recent trends might reflect medium-to-long-term expectations of more accommodative U.S. monetary policy rather than short-term fluctuations in interest rates or dollar strength alone. This shift towards viewing gold primarily for its hedging and reserve attributes rather than just its financial nature could explain its sustained rally despite traditional economic indicators suggesting otherwise [para. 15][para. 16].

China's significant role in global consumption alongside central banks' increased acquisitions highlights a broader recognition of gold's value beyond just investment or speculative interests but also as part of strategic reserve diversification efforts reflecting concerns over currency stability amid global economic uncertainties [para. 17][para. 18].

Investment products related to gold remain diverse ranging from physical purchases like jewelry and bars to bank savings plans and fund products targeting different aspects of the gold market offering various entry points for investors seeking exposure to this asset class amidst its recent bull run driven by both demand-side pressures including central bank buying activities as well as supply-side constraints limiting available quantities for investment purposes contributing further towards upward price momentum even as debates continue regarding future directions amidst regulatory interventions aimed at curbing excessive speculation within this space[para. 19][para. 20][para. 21][para. 22][para. 23][para. 24].

Despite potential corrections or adjustments ahead given current high levels relative historical standards along with ongoing monitoring by regulatory authorities concerned about speculative excesses within certain segments particularly ETFs experiencing rapid inflows there remains strong underlying support for higher price levels underpinned by fundamental factors such central bank purchasing behaviors safe-haven investments alongside broader shifts towards more accommodative monetary policies expected globally which could sustain upward momentum going forward even if short-term volatility persists reflecting complex interplay between various driving forces influencing market dynamics at present[para. 25][para. 26][para. 27][para. 28].