Economic Daily: Gold has become a risk asset

ME News Report, May 20 (UTC+8), states that as international gold prices fluctuate wildly between historic highs, gold has transformed from a traditional safe-haven asset into one of the most volatile risk assets globally. At the same time, major international institutions have shown significant divergence in their expectations for gold price trends. Why is gold no longer a safe haven? There are three main reasons. First, trading is extremely crowded. Second, the transmission path of liquidity shocks has changed. When assets are broadly declining, investors face margin call pressures, and due to its excellent liquidity, gold becomes a prioritized asset to sell off for cash, triggering a negative feedback loop of "decline—selling—further decline" through stop-loss orders and quantitative selling. Third, the fundamental pricing logic has undergone a major shift. The correlation between gold and interest rates has returned to a high level. In summary, gold is no longer a safe haven but a source of risk itself. The supporting factors for the continued rise in gold prices are gradually loosening, and downward pressure is gathering beneath the surface. Since international gold prices previously surged excessively, a correction below the fair value is also possible in the future. In the medium to long term, gold prices will eventually fall below $4,000 per ounce, stabilizing only at reasonable levels. Moreover, fluctuations in international gold prices will inevitably impact domestic gold prices. Therefore, it is very necessary to strengthen risk awareness. (Source: Jin10)
GLDX-2.34%
XAU-3.74%
View Original
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments