Gold prices rise again! Multiple risks fuel safe-haven demand.

With escalating geopolitical tensions, international gold prices have risen again.

As of 11:30 am on June 13, the COMEX gold futures price continued to fluctuate, reaching a high of $3467 per ounce. As of 11:30 am on June 13, the Shanghai Gold Exchange announced that the price of gold T+D was 794.50 yuan/gram, an increase of 1.77% during the session. The price of gold jewelry also rose simultaneously, with Chow Tai Fook's gold price at 1030 yuan/gram.

From the international market perspective, the tense situation in the Middle East, the escalation of the Russia-Ukraine conflict, and the continued high uncertainty surrounding the US Trump administration's tariff policies have driven up gold prices due to increased risk aversion in the market. In addition, a major recent change in the gold market is that gold has become the second-largest reserve asset for central banks globally. How should the future trend of gold prices be viewed? Many analysts believe that in the short term, gold prices may fluctuate due to factors such as tariff easing and sudden changes in the geopolitical situation; in the medium to long term, gold prices are still in an upward channel.

Geopolitical tensions push up gold prices. Multiple factors have combined to cause a sustained rise in gold prices.

From the perspective of US economic data, Qu Rui, deputy director of the Research and Development Department of Orient Securities, analyzed that the US ISM Manufacturing and Services Purchasing Managers' Index (PMI) both fell below the boom-bust line in May, exacerbating market concerns about a US economic downturn. Coupled with May's consumer price index (CPI) data being lower than expected across the board, the decline in the US dollar index has benefited gold. Hu'an Fund pointed out that the market's expectations for a Fed rate cut in the second half of the year have recently heated up again, coupled with increasingly tense geopolitical situations and uncertainties surrounding US tariff policies, gold continues to be favored by risk-averse funds. In its report, New Century Futures analyzed that positive signals have emerged in the Sino-US trade relationship, with both sides reaching a preliminary agreement on implementing the consensus reached during the phone call between the heads of state and consolidating the results of the talks, leading to a cooling of market risk aversion and pressure on gold demand. At the same time, geopolitical risks in the Middle East have risen significantly, with the ongoing Russia-Ukraine conflict and Israel's attacks on Iran exacerbating regional tensions and pushing up market volatility (VIX index). From the perspective of capital flows, market differentiation has intensified. The report points out that the gold market is showing a differentiated trend, with institutional investors reducing their holdings of gold ETFs, while speculators increasing their non-commercial net long positions, indicating that there are differing views on gold in the market.

Demand provides strong support. As a safe-haven asset, changes in the geopolitical situation are closely related to gold price trends. In addition, gold prices are also supported by demand. Hu'an Fund pointed out that according to the latest report released by the European Central Bank, driven by both the global gold rush and soaring gold prices, gold has officially surpassed the euro to become the second-largest reserve asset for central banks globally. At the same time, continued gold purchases by central banks have also provided strong support for gold demand. Data from the State Administration of Foreign Exchange shows that as of the end of May 2025, central bank gold reserves stood at 73.83 million ounces, an increase of 60,000 ounces month-on-month, marking the seventh consecutive month of increased gold holdings. "Gold becoming the second-largest reserve asset for central banks globally means that there are both investment opportunities and risks for ordinary investors. As a core tool for hedging risks in the stock and bond markets, gold's strategic value has significantly increased, and in the long term, gold prices have strong upward support, highlighting its investment value," said Qu Rui. It should be noted that the wide fluctuations in gold prices also make investment more difficult. Qu Rui frankly admitted that in the short term, gold lacks clear directional driving factors, and once sudden news such as tariff easing or sudden changes in the geopolitical situation occurs, it may trigger market sentiment fluctuations, thus leading to fluctuations in gold prices; however, from a medium-to-long-term perspective, gold prices are still in an upward channel for three reasons: First, the risk of a US economic downturn is increasing, with weak economic data coupled with disagreements between Trump and the Fed on interest rate cuts increasing market uncertainty about the economic outlook, supporting upward pressure on gold prices. Second, the willingness of central banks around the world to hold gold remains strong. The Trump administration's push for a debt ceiling plan will lead to a continued expansion of the US fiscal deficit, while the volatility of its policies will exacerbate the credit risk of the US dollar. Based on strategic security and asset allocation needs, central banks will strengthen their gold reserve allocation. Third, policy uncertainty and geopolitical risks maintain market risk aversion. The flexibility and volatility of Trump's policies mean that future tariff negotiations between the US and other countries remain uncertain, and the continued high level of global geopolitical risks maintains market risk aversion, providing long-term support for gold prices. Qu Rui emphasized that as gold prices repeatedly hit new highs, market attention has increased significantly. Macroeconomic data, the US dollar index and fluctuations in the RMB exchange rate, changes in the geopolitical situation, and adjustments to the Fed's monetary policy, etc., may all trigger sharp fluctuations in market sentiment, leading to significant short-term volatility risks in gold prices. Investors should choose suitable gold investment tools and strategies based on their own risk tolerance.