$XAU/USD (XAUUSD.CFD)$ Gold (hereinafter referred to as "gold") has shown a strong and tenacious trend this year, repeatedly hitting historical highs from the beginning of the year to the present (see attached figure 1). Starting from October 10, gold once again began a rapid rise, reaching a high of $2,758 on October 23 before experiencing a top reversal, with a significant short-term increase. With the continuous rise of the US Dollar Index, which is unfavorable for dollar-denominated precious metals prices, it provided investors with profit incentives that evening; coupled with the current popularity of programmatic trading, any significant adjustment in asset prices will trigger automated stop-loss/take-profit exit operations for positions, further amplifying the decline in gold prices.
$XAU/USD (XAUUSD.CFD)$ Attachment 1
Although the short-term rebound of the US Dollar Index is unfavorable for the dollar, the fundamentals of gold remain unchanged.
Firstly, the United States has just entered a rate cut cycle and will continue to cut rates. According to statistical data, after the United States has initiated rate cuts 4 times in the past, the average gold price has risen by 3.68% one month later. Since the US rate cut from September 19 to today, rising from $2,586 to $2,722 on Friday, October 18, the increase has already reached 5.26%, slightly exceeding the average value. As for the long-term performance, it is even more outstanding! After the past 4 rate cuts, the average price increase of gold after six months and one year reached 14.35% and 15.93% respectively. Based on the current trend of gold prices, the author believes that there is a high chance it will repeat the past performance.
Secondly, central banks around the world...