Three Major Macroeconomic Uncertainties Behind the Rise in Gold Prices

Since 2026, the international gold market has been staging a dramatic rollercoaster: in January, the spot gold price surged past the historical peak of $5,595 per ounce, astonishing the market with the notion that “the gold bull market has no ceiling”; although a phase of correction followed, with London gold experiencing a single-day drop of nearly $100, it quickly stabilized and rebounded. By February 28, London spot gold once again reached $5,279 per ounce, and New York COMEX gold climbed to $5,296 per ounce, while domestic gold spot and futures also rose in tandem, keeping the enthusiasm for gold stocks at a high level.

For a long time, gold pricing has followed the classic paradigm centered on “real interest rates.” However, in recent years, the trends in gold prices have been contrary to traditional frameworks: the Federal Reserve has initiated an aggressive interest rate hike cycle, real interest rates have significantly turned positive, and the dollar temporarily strengthened, which, according to traditional logic, should severely suppress gold prices; yet gold only faced short-term pressure initially before rising against the trend and repeatedly reaching new highs. This divergence marks a profound shift in market pricing logic for gold.

In fact, as a non-interest-bearing, non-sovereign credit-backed physical asset, the sustained strong rise in gold prices is fundamentally driven by the global financial market’s concentrated pricing of macroeconomic uncertainty—what is known as “antiques in prosperous times, gold in chaotic times.” In the current global context, “going long on gold” has precisely echoed “going long on uncertainty”; each round of rising gold prices likely serves as a collective warning from the market about risks in areas such as geopolitical conflict, currency credit, fiscal sustainability, and asset pricing systems.

Geopolitical Risk:

Short-term Pulses and Long-term Narratives

Gold’s safe-haven property is the core foundation that has enabled it to transcend a thousand years of economic cycles and become a globally recognized safe asset. Unlike stocks, bonds, or fiat currencies, gold’s value does not rely on the credit commitments of any government or company, nor is it directly controlled by the monetary policies of a single economy. Under a credit monetary system, the purchasing power of national currencies depends on central bank credibility and fiscal soundness; once the macroeconomic environment becomes turbulent, the intrinsic value of fiat currencies can easily be impacted.

Geopolitical risk has always been the core variable in pricing gold’s safe-haven property. In this round of gold price breakthroughs, the “pulse impact” of geopolitical conflicts combined with “normalized disturbances” have overlapped, upgrading safe-haven demand from short-term transactional needs to long-term allocation needs. In traditional logic, the impact of geopolitical events on gold prices predominantly manifests as short-term pulse markets; after events settle, a market sentiment retreat often brings gold prices down. However, the fragmentation of the current global geopolitical landscape has made uncertainty the norm, thereby altering the pricing paradigm for gold.

From a short-term pulse perspective, sudden geopolitical events have become catalysts for the recent breakthrough in gold prices.

Since the beginning of 2026, multiple geopolitical risks have erupted: the U.S. Navy’s USS Lincoln carrier strike group arrived in the Middle East for military operations, escalating regional tensions; U.S. leaders made high-profile tariff threats, triggering global trade panic; simultaneously, the resource dispute between the U.S. and Venezuela and the hardline stance on Greenland issues further disrupted market expectations. Coupled with the stagnant Russia-Ukraine conflict and ongoing turmoil in the Middle East, market risk aversion surged sharply in the short term, driving international gold prices up significantly. This short-term event-driven buying essentially reflects the market’s immediate pricing of “black swan” events, with gold—being a credit-risk-free ultimate safe-haven asset—becoming the preferred choice for hedging against sudden risks.

From a long-term narrative perspective, the reconstruction of the geopolitical landscape has given rise to a series of new characteristics in safe-haven demand.

Currently, the trend of de-globalization is on the rise, with the geopolitical economic game intensified by the restructuring of supply chains. Regional conflicts like the Russia-Ukraine war and chaos in the Middle East are unlikely to be resolved in the short term, creating a low-intensity, high-durability risk norm. In this context of long-term risk expectations, gold—viewed as a “supra-sovereign currency” credit asset—naturally garners increasing attention from countries, and the global central banks’ initiation of a “gold hoarding wave” has also become a significant driving force behind the recent surge in gold prices.

It is noteworthy that, in addition to central banks, fund companies, investment institutions, ordinary investors, and even everyday consumers in the financial market have played an increasingly significant supporting role. Data shows that in 2025, the average gold allocation ratio among the top twenty sovereign funds globally increased by 1.2 percentage points, with some funds upgrading gold from “alternative asset” to “strategic asset,” aiming for a target allocation of 5% to 8%. Global demand for gold bars and coins increased by 18% year-on-year in 2025, reaching 1,250 tons (a new high since 2011), with a single-quarter demand of 315 tons in the third quarter, up 12% year-on-year; China’s annual demand for gold bars and coins was approximately 320 tons, also up 12% year-on-year.

In the stock market, in 2025, global gold ETFs saw a net inflow of $89 billion, setting a historical record with total holdings rising to 4,025 tons, also a historical peak, and AUM (assets under management) reached $559 billion, more than doubling year-on-year. China’s gold market ETF saw a net inflow of approximately 118 billion yuan (about 19 tons) for the whole year, a historical high, accounting for 26.6% of the global gold ETF net inflow, becoming an important source of gold ETF funding in Asia and worldwide.

Such allocation behaviors based on long-term geopolitical security considerations evidently provide continuous support for gold prices, transforming geopolitical security uncertainty from a short-term emotional variable into a long-term pricing factor.

Currency Credit Risk:

Weakening Dollar System and Revaluation of Non-sovereign Assets

It is noteworthy that gold’s monetary attributes have been drastically amplified in this round of market action, with the core driving force stemming from the rising uncertainty of the global monetary credit system centered on the dollar. As a “non-sovereign credit asset,” gold is not affected by the monetary policies or exchange rate fluctuations of any single country, nor does it constitute the liabilities of any economy. In the context of weakened dollar credit and the reconstruction of the global monetary system, its value anchoring function is being repriced.

Firstly, the high U.S. debt and fiscal sustainability crisis directly erodes the credit foundation of the dollar.

As of 2025, the scale of U.S. government debt exceeded $38 trillion, with annual bond interest payments surpassing $1 trillion, accounting for more than 20% of fiscal revenue, while the debt scale continues to expand. This leads to a persistent decline in market confidence in dollar assets, prompting multiple central banks to initiate asset restructuring processes by reducing U.S. Treasury holdings and increasing gold allocation, raising gold’s share in foreign exchange reserves while hedging against dollar credit risk. According to the World Gold Council’s June 2025 “Central Bank Gold Reserve Survey,” over 90% of responding central banks believe that global central bank gold reserves will increase in 2026, and more than 70% of responding central banks think that the share of the dollar in global reserves will moderately or significantly decrease over the next five years. This collective adjustment behavior in reserves is a vote against the dollar credit system, promoting the revaluation of gold’s monetary properties.

Secondly, the uncertainty of the Federal Reserve’s monetary policy and the mismatch with the global easing cycle further reinforce the financial property pricing of gold.

By 2025, the Federal Reserve had completed three rate cuts, and market expectations widely anticipated further rate cuts in 2026. The cooling of U.S. CPI data in December 2025 further strengthened expectations for a rate cut in March 2026, pushing the dollar index down to the 95 mark, reducing the holding cost of gold. As a zero-yield asset, gold’s attractiveness is negatively correlated with real interest rates; during the global monetary policy easing cycle, the risk-free return rate continues to decline, significantly enhancing gold’s relative attractiveness, while abundant liquidity also provides financial support for rising gold prices. However, it is worth noting that the uncertainty of the Federal Reserve’s policy path may still disrupt gold prices; if the pace of rate cuts falls short of expectations, it may trigger a phase of price correction, and this very policy uncertainty becomes an important component of gold price pricing.

Finally, the acceleration of the “de-dollarization” process has made gold a core lever in the reconstruction of the world monetary system.

Currently, the international trade settlement system is showing a trend of diversification, with an increasing number of commodity trades adopting local currency swaps or settling in non-dollar currencies such as the yuan or euro. Although the dollar still dominates, the proliferation of alternative settlement options is eroding the dollar’s network effects. In this context, gold, as a value carrier that transcends sovereignty, naturally becomes a “strategic ballast” for countries responding to the transformation of the global monetary system. From another perspective, the weakening of dollar credit is also highlighting gold’s value as a “non-sovereign asset” safe haven, which is a core characteristic that distinguishes this round of gold price breakthroughs from previous market actions—gold is no longer merely a tool for hedging short-term currency volatility but has become a long-term allocation asset for addressing the risks of global monetary system reconstruction.

Global Economic Uncertainty:

Slowing Growth Expectations and “Asset Shortages”

At present, the global economy is increasingly facing the risk of mounting growth pressure.

According to the United Nations’ “2026 World Economic Situation and Prospects” report, global investment remains sluggish, and fiscal space is still constrained, while in the context of rising tariffs and increasing policy uncertainty, global trade growth is expected to slow in 2026; meanwhile, global investment remains weak, with geopolitical risks and fiscal tightening restricting investment activities. Coupled with high valuations in equity markets and declining volatility in digital currencies, gold’s anti-inflation properties and risk diversification functions are being re-recognized, becoming an indispensable “safety cushion” in asset portfolios.

Firstly, the warming of stagflation expectations is an important macro backdrop for gold pricing.

Since 2025, although global inflation has eased somewhat, it remains above historical averages. Price pressures stemming from supply chain restructuring continue to exist, while the U.S. economy faces increased downward pressure and the European economy is underperforming, leading the market to start worrying about the more challenging macro scenario of “stagflation.” Historical data shows that gold performs outstandingly in stagflation environments, due to its dual attributes of anti-inflation and safe-haven—when economic growth stagnates, equity assets suffer from declining profits and perform weakly; when inflation remains sticky, bond assets face risks of declining real yields, while gold can effectively hedge against these two types of risks, thus possessing a logical basis for continuous price increases.

Secondly, the shift in allocation demand in the context of “asset shortages” further boosts gold’s valuation.

Currently, global equity market valuations are at historical highs, with divergences in tech sectors like AI intensifying, and the market lacks high-yield assets with certainty. In this situation, gold, as a traditional safe-haven asset, becomes a core choice for optimizing portfolios and diversifying risks due to its low correlation with other assets. Wang Xiang, a fund manager at Bosera Funds, noted that against the backdrop of high equity market valuations and declining attractiveness of alternative assets, the allocation value of gold is likely to continue increasing. This shift in allocation demand essentially reflects the market’s pricing of macroeconomic uncertainty—investors are increasing their gold holdings to hedge against systemic risks faced by their asset portfolios.

Thirdly, the uncertainty surrounding global economic recovery continues to reinforce the long-term allocation logic for gold.

As mentioned earlier, factors such as rising tariffs, tense geopolitical situations, and the continued weakness of the dollar signify that the global economic recovery is fraught with uncertainties. In reality, the global economy has not entered a strong recovery cycle in recent years; instead, it faces multiple challenges such as insufficient demand, sticky inflation, and growth differentiation. For instance, developed economies are under pressure from recession in a high-interest-rate environment, with persistent low sentiment in both manufacturing and services; emerging market countries face capital outflows, currency depreciation, and import-driven inflation challenges, severely lacking growth momentum; and so on. In this context, market risk aversion sentiment is once again reinforced, giving gold prices a long-term support motive.

Conclusion

The continuous rise in gold prices fundamentally serves as an important warning signal of uncertainty in the global macro environment, posing significant challenges to investors, policymakers, and enterprises alike.

For investors, gold indeed possesses safe-haven value, but it is by no means a risk-free asset—after all, gold price trends are also influenced by factors such as the dollar index, Federal Reserve monetary policy, and market liquidity, with the possibility of phase corrections at any time. Blindly chasing high gold assets may lead to investment losses due to price fluctuations. In asset allocation, one should rationally control the proportion of gold in their portfolio, considering their own risk tolerance, to construct a diversified asset mix.

For policymakers, the signals of risk released by rising gold prices should prompt vigilance towards volatility risks in domestic economies and financial markets, stabilizing local currency exchange rates and inflation levels, and enhancing the resilience of their economies. At the same time, countries around the globe should strengthen international cooperation to ease geopolitical conflicts, manage debt risks, and jointly maintain the stability of global economic operations and financial order.

For enterprises, it is essential to remain alert to operational risks posed by geopolitical conflicts, supply chain disruptions, and currency fluctuations, optimizing global industrial chain layouts, and preparing risk hedging plans.

In summary, the rise in gold prices has never been an isolated market phenomenon; it serves as a mirror that clearly reflects the multiple dilemmas in global geopolitics, economic finance, and monetary systems. The current strong performance of gold prices represents not only a direct reflection of short-term geopolitical conflicts and economic fluctuations but also a rational pricing by the market of long-term global uncertainties.

Looking ahead, gold, as the ultimate safe-haven asset, will undoubtedly continue to be a core indicator for observing global market risk preferences. In the future, if global geopolitical conflicts ease, debt risks are effectively managed, and economic recovery momentum strengthens, market risk aversion sentiment will gradually cool, and gold prices will return to rational ranges; conversely, if risk factors continue to ferment, the safe-haven value of gold will become even more pronounced. For the global market, only by addressing deep-seated contradictions and risks and rebuilding a stable economic and political order can market panic be fundamentally alleviated, achieving stable operations in global financial markets.

Author: Fu Yifu, Special Researcher at Suzhou Bank

Source: “Financial Review: Wealth” 2026, Issue 3

Editor: Liu Qiang

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