What does the "gold-buying craze" behind the global gold price hitting a new high reflect?

I. Triple core drivers: Reconstructing the pricing logic of gold
The trust crisis in the credit currency system
The U.S. Treasury bond exceeding 38 trillion U.S. dollars, the government shutdown causing data failure, coupled with the controversy over the independence of the Federal Reserve's policy, have highlighted the attribute of gold as "free of sovereign credit risk". Global central banks have become the "stabilizing anchor" : In the first half of 2025, they net purchased 415 tons of gold. The People's Bank of China has increased its holdings for 11 consecutive months. Emerging markets such as India and Brazil have accelerated the sale of US Treasuries in exchange for gold. 95% of central banks plan to continue increasing their holdings. This strategic reserve behavior directly reduces the circulation volume and lays the foundation for a bull market. ​
The catalytic effect of the shift in monetary policy
The Federal Reserve initiated its rate-cutting cycle in September, and the market expects a 97.3% probability of another 25 basis point cut in October. As an "interest-free asset", gold has seen a sharp drop in holding costs during the interest rate downturn cycle. At the same time, it has the dual advantages of resisting the weakening of the US dollar (the current exchange rate of the US dollar against the Chinese yuan is 7.1259, with increased volatility within the year) and fighting inflation, which has driven a large-scale influx of institutional funds. Goldman Sachs has raised its gold price forecast for 2026 to $4,900 per ounce. Giants such as Bridgewater and BlackRock have increased their holdings in gold ETFs. ​
Structural changes in the demands of market entities
Young people take over as the main consumer force: The ownership rate of gold jewelry among the 18-24 age group has risen from 37% to 62%. They prefer 1-3 grams of lightweight IP jewelry (such as game-themed pendants with an average daily sales volume of over 100 pieces), and view gold as a "wearable financial product". The topic "Golden Combinations" on Xiaohongshu has over 100,000 notes, confirming the shift in trends. ​
Rational "Chinese aunties" : Shifted from impulsive gold buying in 2013 to investing in 40-50 gram gold bars (with the proportion rising to 42%), and used the pullback in gold prices to buy in batches, with an average purchase of 300 grams per customer showing restraint. ​
Retail investors' demand for hedging has exploded: banks' investment in gold bars is out of stock, the transaction volume of online accumulation business has tripled, and 68% of Generation Z believe that gold is easier to understand than funds. ​
II. Four profound reflections: A mirror image of the global economy and society
The "Barometer" of global economic uncertainty
The resonance of risks such as geopolitical conflicts, the complication of trade situations, and concerns over a US economic recession (with the unemployment rate hitting a new high in 2021) has made gold the only "certain asset". London gold has risen by 51% this year, achieving its best performance since 1979, confirming the market's anxiety about the future. ​
An accelerating signal of the "de-dollarization" process
The essence of the central bank's gold purchase is a strategic layout to "de-dollarize" foreign exchange reserves. Goldman Sachs pointed out that Asian central banks have distanced themselves from the US dollar system by increasing their gold holdings. This long-term behavior has broken the traditional pricing logic, upgrading gold from a "safe-haven tool" to a "currency system hedging asset". ​
The paradigm shift of intergenerational consumption concepts
Young people combined "self-pleasing aesthetics" with "asset preservation", driving Chow Tai Fook's "fixed-price" gold revenue to surge by 105.5%. The rational allocation of the middle-aged and elderly groups reflects the residents' alternative choices for the decline in the yield of financial products (the weakened appeal of bank wealth management products). This intergenerational synergy has restructured the dual attributes of gold as both a commodity and a financial asset. ​
Early warning of hidden concerns about asset bubbles and risks
The market has shown irrational characteristics: Citigroup has shifted from being bearish on $3,000 to an upward adjustment to $4,000, turning from short to long. Central banks' gold purchases have led to a reduction in tradable gold, and a small amount of buying can trigger a sharp increase. Meanwhile, the development of digital currencies and the risk of diverting from other metals may limit the sustainability of gold's high prices.

Other Reasons:

Economic Uncertainty and Safe-Haven Demand

Recession Risk and Inflation Concerns: When the global economic outlook is uncertain and facing recessionary risks, investors seek out traditional safe-haven assets like gold as a hedge. Furthermore, persistent inflation erodes the purchasing power of currencies, and gold, due to its value-preserving properties, serves as an effective hedge against inflation.

Dollar Devaluation and De-Dollarization: Some countries, particularly emerging market economies, are actively increasing their gold reserves to hedge against the risks of dollar-denominated assets and reduce their reliance on the US dollar. The US's widening fiscal deficit and monetary policy have also weakened confidence in the dollar, prompting investors to turn to gold.

Negative Real Interest Rates: When interest rates fall below the inflation rate, holding interest-earning assets like savings accounts results in losses, making non-interest-earning gold even more attractive.

Geopolitical Risk and De-Risking: Geopolitical Tensions: The Russia-Ukraine conflict, unrest in the Middle East, and the US-China trade war have heightened global geopolitical uncertainty, prompting investors and central banks to seek safer assets. Distrust of Traditional Financial Assets: Amidst overvalued stock markets and volatile bond markets, many investors have lost confidence in traditional financial assets and are turning to gold as a hedging tool to diversify their portfolios.

Central Bank and Investor Behavior Shifts
Global Central Banks Increase Gold Holdings: Central banks, particularly those in emerging markets, have continued to increase their gold holdings in significant quantities, driven by strategic considerations to diversify their reserves and mitigate dollar risk.

Growing Investment Demand: Institutional investors are re-emphasizing the diversification value of gold, while retail investors are becoming more accessible through channels such as exchange-traded funds (ETFs), driving demand.

Market Sentiment and Cyclical Factors
Market Sentiment Drives: During periods of rising gold prices, market sentiment drives more investors to follow suit, further driving up prices.

Festivals and Cultural Demand: In some countries, such as India, demand for gold during traditional festivals also influences gold prices.

In summary, the "gold rush" reflects a widespread lack of confidence in traditional financial and monetary systems among investors and central banks amid global economic and geopolitical turmoil, leading them to turn to gold as a long-term store of value and safe haven. This is not just a short-term market fluctuation, but also a deep reflection of the current global risk environment.

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