--- title: "Daniel Zhang: Gold needs to open up imagination" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/260823265.md" description: "Zhang Yu pointed out that gold prices broke through USD 4,000 per ounce during the long holiday, attracting market attention. Starting in 2023, the strategy has been to be bullish on gold. Reviewing historical perspectives, it emphasizes that gold's \"unconventional momentum\" is the core driving force behind the price increase. The latest research has constructed an implied \"order reconstruction\" index for gold, revealing a significant decline in the correlation between traditional macro factors and gold prices, reflecting investors' expectations for a reconstruction of the global financial and political order" datetime: "2025-10-13T03:05:42.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/260823265.md) - [en](https://longbridge.com/en/news/260823265.md) - [zh-HK](https://longbridge.com/zh-HK/news/260823265.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/260823265.md) | [English](https://longbridge.com/en/news/260823265.md) # Daniel Zhang: Gold needs to open up imagination During the long holiday, the price of gold broke through $4,000 per ounce, attracting market attention. Therefore, in this report, we will reiterate our overall view on gold and share our latest research. ## **1\. Research Context: Strategically Bullish on Gold Starting in 2023** **First, let's review our historical views on gold.** In December 2023, we published our first gold report, stating that "under the century's changes, we are strategically bullish on gold for the next ten years, starting next year," hence the title of the report was "Gold: A Century, A Decade, Next Year." Since then, we have conducted research in May 2024, March 2025, and May 2025, focusing on gold pricing logic, price simulations under extreme scenarios, and the driving forces behind rising gold prices. ## **2\. Latest Research: What is Gold Pricing?** **Today, I want to focus on sharing our latest research. In the report published in May 2025, we constructed the implied "Order Reconstruction" index for gold, aiming to address a key question**: Traditional explicit influencing variables of gold prices, such as real interest rates, inflation expectations, the US dollar index, and global central bank gold purchases, are all well-known factors in the market. However, these explicit factors struggle to explain the significant rise in gold prices this time. The reason is that the logic of these factors has been very clear over the past 30, 20, and even 10 years, and investors have a sufficient understanding of them. The pricing system based on these factors has matured to a high degree, making it difficult to generate additional upward momentum. Therefore, after stripping these traditional explicit factors from the gold price, the remaining unexplained portion represents the abnormal increase in gold that surpasses traditional factors, which we define as gold's "unconventional momentum," as shown in the figure below. **This part of "unconventional momentum" is crucial, as it reflects investors' expectations for the reconstruction of the global century-old financial and political order.** Since 2023, this force has been the core driving force behind the trend of gold prices. The implied "Order Reconstruction" index we constructed is a quantitative representation of "unconventional momentum." If we observe high-frequency data from 2022 to the present, the correlation between gold prices and all traditional macro factors (such as inflation, interest rates, the US dollar index, etc.) has shown a historically rare divergence, with a significant decrease in explanatory power and a substantial reduction in the fit of their trends; meanwhile, the fit between the implied "Order Reconstruction" index and gold prices is very high, even in small monthly price fluctuations, the peaks and troughs of both almost correspond completely. ## **3\. Looking Ahead: Continue to Strategically Bullish on Gold** **First, the implied "Order Reconstruction" index remains the core driving force behind the recent rise in gold prices.** There are views in the market suggesting that the recent rise in gold is due to traditional factors such as expectations of interest rate cuts by the Federal Reserve, but we believe this logic is not valid. If we still rely on traditional factors such as central bank gold purchases and Federal Reserve interest rate cuts as reasons to be bullish on gold, it clearly cannot explain the continuous rise in gold prices over the past two years In fact, the gold market that started in August has a poor fit with all traditional macro factors. Even though the Federal Reserve's interest rate cuts during this period align with the rise in gold prices, we still do not believe there is a direct causal relationship between the two. We believe that the initiation of gold since August is mainly related to the frequent political and economic instability events globally in the past two months, such as the unrest in eastern Indonesia, political turmoil in Nepal, fluctuations in France's political situation, and Argentina's economic issues. The fermentation of these events has driven the implied "order reconstruction" index of gold to show abnormal movements, which remains the best variable to explain this round of gold price increase. This indicates that the core force driving gold prices currently is the expectation of order reconstruction that traditional factors cannot explain. Since the fluctuations in gold prices no longer rely on traditional factors, we need to maintain a sufficient strategic awe of this invisible force. Currently, the implied "order reconstruction" index for gold has approached and surpassed the historical high point of 1980, marking a breakthrough after 40 years. If this breakthrough stabilizes, it is expected to open up new upward space for gold prices. **Second, from the perspective of asset allocation, the allocation value of gold is very significant.** Even if only 5% of gold is added to a diversified asset portfolio, it can effectively optimize the risk-return frontier (either increasing returns per unit of risk or reducing risk per unit of return), ultimately significantly improving the risk-return characteristics of the portfolio. From the perspective of global financial markets, in all financially developed countries, the correlation coefficients of stock and bond assets with U.S. stocks and bonds are generally high. For example, the Nikkei index in Japan has basically followed the trends of U.S. stocks over several decades. From the perspective of physical commodities, most globally investable physical commodities have a high correlation with the growth rate of demand from China. Among various assets, the only one that can simultaneously achieve "low correlation with U.S.-dominated developed financial circle assets" and "low correlation with China-dominated physical demand assets" is almost solely gold (I believe that cryptocurrencies represented by Bitcoin essentially belong to the U.S.-led developed financial system and are not assets of the same nature as gold), thus highlighting the significant allocation value of gold. **Therefore, whether from the core force driving the rise in gold (expectation of order reconstruction) or from the scarcity of gold in asset allocation, we maintain a strategic bullish view on gold. The breakthrough of gold prices above $4,000 per ounce does not signify the end of the upward trend, and we maintain a sufficient strategic awe of the gold price trend.** Author of this article: Zhang Yu, Source: Yi Yu Zhong De, Original title: "Zhang Yu: Gold Needs to Open Imagination - Zhang Yu's Monthly Minutes No. 123" Risk Warning and Disclaimer The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. 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