Author: TVBee

Two months ago, Brother Bee warned about the risks of gold; besides technical indicators, the historical similarity does not seem coincidental.

The day after Brother Bee's post, gold reached a historical high, followed by a decline, a rebound, and then another decline, dropping to around $4,100 yesterday.

Subsequently, influenced by Trump's speech, gold rose alongside U.S. stocks and BTC.

However, setting aside short-term fluctuations, is the logic of gold rising still valid?

┈➤ The Logic of Gold Rising One: Safe Haven

The core logic for rising gold is safe haven.

From January 2000 to August 2011, gold surged by 600%, with an average monthly compound growth rate of about 1.41%.

This period covered the dot-com bubble of 2000 and the subprime mortgage crisis of 2008.

╰✦ Change in Market Motives and Behaviors

However, in recent months, how many people bought gold for safe haven?

And how many were trading based on candlesticks and indicators, even going long or short on gold?

Under such motives and behaviors dominating the market, risk remains, yet the safe haven logic of gold has likely diminished significantly.

╰✦ Gold Begins to Show Synchronization with BTC and U.S. Stocks

In recent days, it can be seen that gold fluctuates in tandem with BTC and U.S. stocks.

Yesterday, following Trump's speech, gold along with BTC and U.S. stocks rebounded simultaneously.

Gold's safe haven attribute may have been overshadowed by speculation in the short term.

┈➤ The Logic of Gold Rising: Inflation

From August 2018 to August 2020, gold rose by approximately 71.58%, with an average monthly compound growth rate of about 2.275%.

This period coincided with the trade war and the impact of the pandemic, during which the Federal Reserve began low interest rates and unlimited QE.

The second logic for gold rising is inflation; in a clearly inflationary environment for fiat currency, gold's value preservation ability may prove effective.

╰✦ Expectations for Dollar Inflation Are Weakening

However, the Federal Reserve's dot plot released in March shows an expectation of reducing interest rates 0-1 times by 2026. In such an environment, the U.S. CPI may rise due to oil effects, but this will influence global prices. Compared to other fiat currencies, the expectation for the dollar to depreciate by 2026 has decreased.

╰✦ Expectations for Yen Inflation Are Weakening

As a safe haven currency, the yen is also affected by loose fiscal policy and tight monetary policy, yet Japan’s interest rate hike plan continues to be practiced, and expectations for yen depreciation may also be weakening.

┈➤ The Logic of Gold Rising Three: Purchases by CN

It cannot be denied that CN's increase in gold reserves is significant, which affects domestic investors.

Without discussing CN's motivations for buying gold, looking solely at the buying behavior itself, the amount purchased is clearly decreasing.

Since November 2022, the CN central bank has increased its gold reserves, by March 2024, gold reserves increased from 62.64 million ounces to 72.74 million ounces, adding 10.1 million ounces of gold. An average of 594,100 ounces of gold was added per month.

From March to September 2024, the speed of gold purchases slowed down, averaging an increase of 20,000 ounces of gold per month during this period.

After that, it primarily added 160,000 ounces of gold per month, but after four months, the pace of gold purchases began to decrease.

In the last five months, the CN central bank has primarily added 30,000 ounces of gold per month.

The bad news is that CN's pace of buying gold has slowed significantly.

The good news is that CN is still continuously buying gold.

Thus, this is the remaining 0.5 logic for gold to rise.

┈➤ In Conclusion: Can We Expect This 0.5 Reason?

╰✦ The Impact of CN Purchases on Global Markets Is Weak

On one hand, the approximately 7 billion ounces of gold mined globally, with about 45%-48% attributed to jewelry, 20%-22% to private investment, and around 17% to official reserves. Only considering the private investment portion, it amounts to about 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 reached 18.2 million ounces.

The 30,000 ounces of gold bought monthly by the CN central bank has a weak positive impact on prices.

╰✦ Divergence Between CN Purchases and Gold Prices

On the other hand, taking a step back to assume that CN's gold purchases are an important driving force for rising gold. However, since the end of 2024, CN has clearly slowed down its gold purchases. In contrast, the gold price has been accelerating upwards since the end of 2024. From a technical perspective, this is a divergence.

Thus, while the CN central bank is still buying gold, it can certainly form a positive signal, but at most it can only be regarded as a 0.5 reason for gold to continue rising.

╰✦ The Rate of Gold Price Increase Has Surpassed Previous Levels

Finally, from October 2022 to February 2026, the price of gold increased by 217.7%, with a monthly compound growth rate of 2.93%.

Comparing these three waves of gold rise, the first wave was relatively slow because there was no QE tool before 2008.

The second wave of gold rise happened due to gold facing both safe haven demand and dollar inflation.

The third wave of gold rising is mainly due to safe haven motives; although CPI is also not low, whether in terms of monetary policy easing or CPI, dollar inflation is significantly lower than during the second wave.

However, the speed of the third wave of gold rise has already surpassed the second phase, which included "large-scale money printing." Therefore, the speed of gold’s rise may have already overdrawn future safe haven space.

Thus, with the safe haven attribute being overdrawn and inflation expectations weakening, unless more extreme and unexpected black swans occur (such as war involving nuclear weapons), it is not advised to have high expectations for this 0.5 reason for gold to rise.

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