Author: TVBee Source: X, @blockTVBee
Two months ago, Brother Bee warned about the risks of gold. Besides technical indicators, historical similarities are not mere coincidences.
On the second day after Brother Bee’s post, gold reached a record high, then experienced a decline, a rebound, and another drop, with yesterday’s low around $4,100.
Later, influenced by Trump’s speech, gold, US stocks, and BTC all rose simultaneously.
However, setting aside short-term fluctuations, does the logic behind gold’s rise still hold?
Gold Rising Logic 1: Safe Haven
The core logic for gold’s rise is as a safe haven.
From January 2000 to August 2011, gold surged by 600%, with a monthly compound growth rate of about 1.41%.
This period covers the 2000 dot-com bubble and the 2008 subprime mortgage crisis.
Changes in Market Motivation and Behavior
However, in recent months, how many people bought gold for safety?
And how many are trading based on K-lines and indicators, even going long or short on gold?
Under such market motivations and behaviors, risks remain, but the safe haven logic of gold may have significantly weakened.
Gold Now Moving in Sync with BTC and US Stocks
Recently, gold has been moving in tandem with BTC and US stocks.
Yesterday, after Trump’s speech, gold, BTC, and US stocks rebounded together.
The safe haven attribute of gold might be temporarily overshadowed by speculative activity.
Gold Rising Logic 2: Inflation
From August 2018 to August 2020, gold increased by approximately 71.58%, with a monthly compound growth rate of about 2.275%.
This period coincided with trade wars and the pandemic, during which the Federal Reserve adopted low interest rates and unlimited QE.
The second reason for gold’s rise is inflation. In an environment with obvious fiat currency inflation, gold’s value preservation could be effective.
Expectations of US Dollar Inflation Are Diminishing
However, the Fed’s March dot plot shows only 0-1 rate cuts by 2026.
In such an environment, US CPI might rise due to oil prices, but this would affect global prices.
Compared to other fiat currencies, the dollar’s depreciation expectation by 2026 has decreased.
Expectations of Yen Inflation Are Diminishing
As a safe-haven currency, the yen is affected by both loose fiscal policy and tightening monetary policy.
However, Japan’s rate hike plans are still ongoing, and the yen’s depreciation expectation may also be weakening.
Gold Rising Logic 3: China’s Buying
It cannot be denied that China has been increasing its gold reserves significantly, influencing domestic investors.
We won’t discuss China’s motives for buying gold; looking solely at the behavior, the purchase volume has clearly decreased.
Since November 2022, China’s central bank has been increasing gold reserves, from 62.64 million ounces to 72.74 million ounces by March 2024, an increase of 10.1 million ounces.
Average monthly purchase: about 594,100 ounces.
From March to September 2024, the pace slowed, averaging about 20,000 ounces per month.
After that, the main pace was around 160,000 ounces per month for four months, then slowed down again.
In the last five months, China’s central bank has been mainly adding about 30,000 ounces per month.
The bad news is that China’s gold purchase speed has slowed significantly.
The good news is that China is still buying gold.
Thus, this is the only remaining 0.5 reason for gold’s rise.
Final thoughts: Can we expect this 0.5 reason?
The impact of China’s gold purchases on the global market is weak
On one hand, about 7 billion ounces of gold have been mined globally, with jewelry accounting for roughly 45-48%, private investment about 20-22%, and official reserves around 17%.
Considering only private investment, that’s approximately 1.47 billion ounces.
The latest LBMA settlement data for January 2026 shows daily clearing volume in London alone reaching 18.2 million ounces.
China’s monthly purchase of 30,000 ounces has minimal impact on prices.
Discrepancy Between China’s Buying and Gold Prices
On the other hand, even if we assume China’s gold purchases are a key driver of the rise, since late 2024, China has been slowing down.
Meanwhile, gold prices have accelerated upward since late 2024.
From a technical perspective, this is a divergence.
So, although China’s central bank is still buying gold, which can signal some positive sentiment, it probably only accounts for about 0.5 of the reasons for continued gold price increases.
Gold Price Growth Has Surpassed Past Trends
Finally, from October 2022 to February 2026, gold prices have increased by 217.7%, with a monthly compound growth rate of 2.93%.
Comparing these three waves of gold price increases:
- The first wave was relatively slow, mainly because before 2008, QE was not yet a tool.
- The second wave was driven by safe-haven demand and US dollar inflation.
- The third wave is mainly driven by safe-haven motives, even though CPI isn’t low, but both monetary easing and dollar inflation are much lower than during the second wave.
However, the speed of the third wave has already exceeded that of the second, which included massive liquidity injections.
This suggests that the pace of gold’s rise may have already overextended its safe-haven potential.
With safe-haven attributes potentially exhausted and inflation expectations waning, unless more extreme, unexpected black swan events occur (e.g., nuclear war), it is not advisable to hold high expectations for this remaining 0.5 reason for gold’s rise.
