<div id="readability-page-1"><div><div>Recently, spot gold continued to experience a sharp sell-off, falling below the psychological level of $4,500 per ounce. On May 20th<img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469212_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="399" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469212_image3.png"/>With the geopolitical stalemate in the Strait of Hormuz persisting and oil prices remaining high, dollar liquidity in many countries continues to be under pressure, forcing them to sell gold; meanwhile, India has significantly increased import tariffs on gold. The combination of factors, including lower-than-expected global central bank gold purchases in the first quarter and rising expectations of inflation and interest rate hikes, significantly suppressed gold prices. Particularly against the backdrop of soaring US Treasury yields (10-year Treasury yields exceeding 4.5% and 30-year Treasury yields exceeding 5.0%), the cost of holding gold increased, the risk-reward ratio deteriorated, and CTA and leveraged funds were forced to liquidate their positions, thus exacerbating short-term volatility. Furthermore, under the impact of oil supply shocks, gold and oil prices showed a strong negative correlation, while gold and the stock market showed a relatively positive correlation. This indicates that the gold market is not yet prepared for a safe-haven scenario. However, although speculative net long positions have clearly decreased, retail funds that previously flooded into gold &#34;currency devaluation trading&#34; have not yet fully exited the market. This leaves the gold market in a state of continued vulnerability: it overreacts to any negative news regarding the Middle East stalemate, interest rate hikes, or a stronger dollar. Furthermore, gold prices remain highly sensitive to rising real interest rates, and the gold correction is unlikely to end in the short term. The short-term breakout in gold indicates that, under the current trading logic, it has not yet entered a safe-haven mode, but continues to exhibit characteristics of a highly beta risk asset. This means that the market will remain in a volatile period of risk release, and investors need to remain cautious and patient at the tactical level. However, strategically, we remain bullish on gold: After the end of the temporary liquidity squeeze, the long-term logic will return, and fiscal deterioration, dollar diversification, and geopolitical uncertainty will continue to strengthen gold's role as an insurance asset. <img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469215_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="220" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469215_image3.png"/><h2>Global central bank gold purchases have slightly reduced support</h2>Since the Russia-Ukraine conflict, continuous gold purchases by central banks around the world (especially emerging market central banks) have been the most stable force supporting gold prices.Since the Russia-Ukraine conflict, continuous gold purchases by central banks around the world (especially emerging market central banks) have been the most stable force supporting gold prices. During the US-Iran conflict, a key change was that some central banks were forced to become gold sellers due to liquidity pressures. For example, the Turkish central bank sold approximately 60 tons of gold reserves in March through sales and swap operations to defend the lira, which had plummeted due to soaring energy import costs. Adding to this, India recently doubled its gold import tariff to 15% and imposed strict import quotas to cope with foreign exchange pressures, which will likely lead to a decline in private gold demand in India, putting temporary pressure on gold prices. Given the current geopolitical risks and the impact of high oil prices, dollar liquidity pressures will continue, and some central banks facing dollar liquidity shortages may continue to sell gold. However, many regions continue to strategically increase their gold reserves. For example, the People's Bank of China accelerated its gold purchases again in April, marking the 17th consecutive month of increases. Currently, structural buying by other central banks globally has slowed down during this period of high gold prices and increased volatility, with many waiting for a better entry point. This short-term tactical silence has become a significant force weakening gold prices. <img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469216_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="231" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469216_image3.png"/>Although central bank gold purchases are currently slowing, they are still expected to reach an average monthly purchase volume of 60 tons in 2026. Currently, global central bank gold purchase data is significantly underestimated because a large portion is not officially disclosed. A large amount of hidden buying can be tracked through UK customs net gold export data and changes in London gold vaults.<img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469216_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="231" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469216_image3.png"/>While central bank gold purchases are currently slowing, they are still expected to reach an average monthly purchase volume of 60 tons in 2026. Currently, global central bank gold purchase data is significantly underestimated because a large portion is not officially disclosed. A large amount of hidden buying can be tracked through UK customs net gold export data and changes in London gold vaults.<img src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469217_image3.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="600" height="506" original-src="https://imageproxy.pbkrs.com/https://img.jinse.com.cn/7469217_image3.png"/><h2>Gold prices will remain volatile in the short term, but the medium- to long-term positive logic remains</h2>The future trend of gold will depend on three stages:1) The current inflation shock stage.1) The current inflation shock stage. 1) Inflationary shocks and high interest rate suppression: Gold prices still face volatility risks; 2) Slowing growth phase: High oil prices drag down the economy, leading to a slowdown in global growth; 3) Policy shift phase: As downward pressure on the economy increases, central banks around the world are shifting back to easing, real interest rates are falling, and gold is re-entering an upward cycle. Currently, the situation in the Middle East remains uncertain, oil prices are high, and both inflation expectations and real interest rates are rising. Furthermore, increasing concerns about double-dip inflation will further solidify the hawkish stance of global central banks. High real interest rates also increase the opportunity cost of holding gold. Gold prices are expected to fluctuate widely around $4,500 in the short term, potentially even testing the $4,300 support zone. Volatility will remain high, and market sentiment will remain sensitive. Closely monitor marginal changes in the Middle East situation and confirmation of a consolidation around $4,500. The next trading focus will be on observing the topping characteristics of oil prices and substantial progress in geopolitical negotiations. If the situation in the Middle East eases substantially, the supply premium for crude oil will be quickly squeezed out, the weakening trend of the US dollar will reappear, and the heavy pressure on gold will be relieved. Technically, investors need to be wary of a false breakout below $4500. Once market sentiment becomes extremely pessimistic and the bearish momentum is exhausted, a strong recovery above this level would be a clear right-side buy signal. In the medium to long term, the underlying logic of central bank gold purchases has never wavered, and the historical recurrence will provide solid bottom support. Although some emerging markets have sold off gold in the short term to alleviate their financial difficulties, this is merely a tactical compromise. From a long-term perspective, the world is moving from unipolar hegemony and the dominance of the US dollar towards great power competition and multipolarity. Currently, emerging market central banks' gold reserves account for only 16% of their total reserves, leaving significant room for growth compared to the historical average (approximately 40%). Overall, the recent drop in gold prices below $4,500 per ounce represents a stress test driven by a combination of factors, including liquidity squeeze, a surge in real interest rates, and crowded long positions. At the tactical level, investors need to maintain a sufficient safety margin, avoid blindly taking on the risk of a decline, and wait for the market bottom to form naturally. At the strategic level, based on the wave of de-dollarization, the potential entry of Western institutional funds, and the long-term prospect of debt monetization, the foundation for a long-term bull market in gold remains solid.</div></div></div>

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Gold prices have fallen below $4,500 per ounce due to a combination of geopolitical tensions, high oil prices, and increased import tariffs in India. Central banks have reduced gold purchases, and liquidity pressures have forced some to sell gold. Despite short-term volatility, the long-term outlook remains bullish as geopolitical uncertainties and fiscal deterioration may strengthen gold's role as a safe-haven asset. Investors are advised to remain cautious in the current market environment.

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Gold fell below $4,500. How long will this correction last?