Huaxi Securities: A new wave of gold market rally has begun, but it may have to wait until the Fed's interest rate cut expectations are reignited.

How will the Federal Reserve’s interest rate cut expectations reshape the logic of gold investments?

According to Huaxi Securities, gold volatility has significantly amplified, and position control remains crucial. The implied volatility of gold has continuously climbed to 35 since last Thursday, reaching a historical extreme level of 99.4% since 2009. This is due to gold entering a sharp decline, waiting for volatility to decrease. In the long term, the underlying logic supporting gold still exists: on one hand, with the accelerated evolution of the geopolitical landscape, the marginal weakening of the dollar’s credibility, and the fundamental logic of global central banks’ “de-dollarization” remains unchanged; on the other hand, the scale of U.S. debt continues to rise, and the dependence on loose monetary policy remains high, thus there is no foundation for a trend reversal in gold. The recent significant adjustment in gold prices is more of a deep correction after prior overvaluation, and it is expected that the subsequent bottoming recovery will take a considerable amount of time. The start of a new round of gold market activity may have to wait until the Federal Reserve’s interest rate cut expectations are reignited.

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