There may only be 0.5 reasons left for gold to rise.
Two months ago, Brother Bee warned of the risks of gold. Apart from technical indicators, the historical similarities are not a coincidence.
Gold reached a record high the day after the article was published by Bee Brother. After a period of decline and rebound, it fell again, reaching a low of around $4,100 yesterday.
Subsequently, influenced by Trump's remarks, gold, US stocks, and BTC all rose simultaneously.
However, setting aside short-term fluctuations, does the logic behind gold's rise still hold true?
┈➤ The first reason for gold's rise: safe haven
The core logic behind the rise in gold prices is safe-haven demand.
From January 2000 to August 2011, gold prices surged by 600%, with a monthly compound growth rate of approximately 1.41%.
This period covers the dot-com bubble of 2000 and the subprime mortgage crisis of 2008.
╰✦Changes in market motives and behaviors
However, how many people have bought gold in recent months as a safe haven?
How many people trade, or even go long or short, gold based on candlestick charts and indicators?
With such market motives and behaviors at the forefront, risks remain, but the safe-haven logic of gold has likely been significantly diminished.
Gold has begun to move in tandem with Bitcoin and US stocks.
In recent days, we have seen gold fluctuate in tandem with BTC and US stocks.
Gold, Bitcoin, and US stocks all rebounded yesterday following Trump's speech.
Gold's safe-haven properties may be overshadowed by its speculative attributes in the short term.
The logic behind rising gold prices: Inflation
From August 2018 to August 2020, gold rose by approximately 71.58%, with a monthly compound growth rate of approximately 2.275%.
This period covers the time when the Federal Reserve initiated low interest rates and unlimited quantitative easing under the influence of the trade war and the pandemic.
The second reason for the rise in gold prices is inflation. When fiat currencies are significantly inflated, gold's ability to preserve value may come into play.
Expectations of dollar inflation are weakening.
However, the Federal Reserve's dot plot of interest rate projections released in March indicated 0-1 rate cuts in 2026. In this environment, the US CPI may rise due to the influence of oil prices, but this will affect global prices. The expectation of the US dollar depreciating relative to other fiat currencies in 2026 has decreased.
Expectations of yen inflation are weakening.
As a safe-haven currency, the Japanese yen is affected by both loose fiscal policy and tight monetary policy. However, Japan's interest rate hike plan is still being implemented, and the expectation of yen depreciation may be weakening.
┈➤ The third reason for gold's rise: CN's buying
It cannot be denied that CN has significantly increased its gold reserves, which has an impact on domestic investors.
Without discussing CN's motives for buying gold, just looking at the buying behavior itself, the amount purchased is clearly decreasing.
The People's Bank of China (PBOC) began increasing its gold reserves in November 2022. By March 2024, its gold reserves had increased from 62.64 million ounces to 72.74 million ounces, an increase of 10.1 million ounces. This represents an average monthly increase of 594,100 ounces of gold.
From March to September 2024, the pace of gold purchases slowed down, with an average monthly increase of 20,000 ounces of gold during this period.
After that, the company mainly increased its gold holdings by 160,000 ounces per month for four months before slowing down its gold purchases.
In the past five months, the Central Bank of China has mainly increased its gold holdings by 30,000 ounces per month.
The bad news is that CN has slowed down its gold purchases.
The good news is that CN continues to buy gold.
Therefore, this is the only remaining 0.5 reason for the rise in gold prices.
┈➤ In conclusion: Can we really have faith in these 0.5 reasons?
CN buying volume has a relatively weak impact on the global market.
On the one hand, approximately 7 billion ounces of gold have been mined globally, of which gold jewelry accounts for about 45% to 48%, private investment accounts for about 20% to 22%, and official reserves account for about 17%. Considering only the private investment portion, that amounts to approximately 1.47 billion ounces.
The latest clearing data from the London Bullion Market Association (LBMA) for January 2026 shows that the average daily clearing volume in the London market alone reached 18.2 million ounces.
The 30,000 ounces of gold purchased monthly by the Central Bank of China has a very weak positive impact on prices.
Technical divergence between CN buying volume and gold price
On the other hand, assuming that CN's gold purchases are a significant driver of gold price increases, it's clear that CN's gold buying has slowed down since the end of 2024. Conversely, gold prices have accelerated since then. From a technical perspective, this represents a divergence.
Therefore, the fact that the central bank is still buying gold, while still forming a positive signal, may at most only be considered 0.5 reasons for gold to continue rising.
The rate of increase in gold prices has surpassed previous levels.
Finally, from October 2022 to February 2026, the price of gold rose by 217.7%, with a monthly compound growth rate of 2.93%.
Comparing these three waves of gold price increases, the first wave was relatively slow because QE was not available before 2008.
The second wave of gold price increases was due to the simultaneous pressure from safe-haven demand and dollar inflation.
The third wave of gold price increases was mainly driven by safe-haven demand. Although the CPI was not low, both the degree of monetary policy easing and the CPI were significantly lower than during the second wave.
However, the third wave of gold price increases has already surpassed the speed of the second phase, which included massive monetary easing. Therefore, the rate of increase in gold prices may have already exhausted future safe-haven demand.
Therefore, given the overexploitation of safe-haven properties and weakening inflation expectations, unless a more extreme and unexpected black swan event occurs (such as the use of nuclear weapons in war), it is not advisable to have too high expectations for these 0.5 reasons for gold price increases.
You May Also Like
VGTEL in Strategic Talks to Acquire Consciousness-Focused Health-Tech Platform
Top 10 free crypto cloud mining platforms in 2026
