Recently, more and more people around me are buying gold, with long lines always forming in front of gold shop counters, and bank investment gold bars frequently out of stock. Opening financial news, the screen is filled with reports of gold prices hitting new highs, with international spot gold breaking $4300/ounce, and domestic gold shop prices having long surpassed 1350 yuan/gram. Many are wondering how long this wave of increase can last.
Old investors should remember the gold bull market of 2019. That year, London gold started at $1280/ounce, fluctuated upwards, and rose to $1510/ounce by the end of the year, with an annual increase of over 18%. The domestic Shanghai gold main contract rose in tandem, and the gold ETF holdings increased by 400 tons, setting a historical high at that time. Many who positioned themselves at low levels made a fortune.
The core logic behind the significant rise in gold prices in 2019 is very clear. The Federal Reserve initiated its first rate cut in ten years, cutting rates three times throughout the year, leading to a decline in the dollar's attractiveness, with funds flowing into gold. The global geopolitical situation was unsettled, with Brexit negotiations dragging on, ongoing conflicts in the Middle East, and escalating trade frictions. Risk aversion made gold a 'safe haven' for capital. Central banks were also continuously purchasing gold, buying 374.1 tons in the first half of the year, providing solid support for gold prices.
The current market environment is strikingly similar to that of 2019. The Federal Reserve officially began its rate-cutting cycle in September 2025, and Goldman Sachs predicts an additional 100 basis points cut in mid-2026. The ongoing loose monetary policy directly lowers real interest rates, closely following the logic of rate cuts in 2019. Global geopolitical risks have escalated significantly, with the Russia-Ukraine conflict stalemated, the Israel-Palestine situation heating up, and the Iranian nuclear issue fermenting. The traditional logic of 'buying gold in troubled times' has been continuously reinforced.
Central banks are buying gold more aggressively than in 2019. In the first three quarters of 2025, global central banks net purchased 634 tons of gold, with October's single-month net purchases reaching 53 tons, setting a new high for the year. Central banks in countries like Poland and Brazil continue to significantly increase their holdings. A survey by the World Gold Council shows that 95% of responding central banks plan to continue increasing their holdings in the next 12 months, making this strategic gold-buying behavior more stable than the market-driven actions of 2019.
The performance of the capital market is also mirroring history. In 2019, gold ETFs gradually saw inflows, while 2025 witnessed a 'buying spree', with global gold ETF purchases exceeding 700 tons. The scale of China's gold ETFs surged from 73 billion yuan at the beginning of the year to 236.1 billion yuan, a remarkable increase of 223%. Domestic futures market gold segment funds have accumulated over 150 billion yuan, with the trend of off-exchange funds accelerating, mirroring the situation in 2019.
The difference now is that the support logic for gold prices is much stronger. In 2019, the dual drivers were 'safe-haven + rate cuts', while in 2025, it has added 'anti-inflation + monetary system reconstruction'. Global inflation remains sticky, and the risk of currency devaluation highlights gold's value retention properties. The U.S. debt has surpassed $35 trillion, and the three major rating agencies have downgraded its sovereign credit rating. Central banks are pursuing 'de-dollarization' through gold purchases, bringing gold's strategic value to unprecedented heights.
How should ordinary investors respond? For those looking to preserve value long-term, avoid chasing high prices or bottom fishing; consider dollar-cost averaging by buying gold ETFs or paper gold to spread out costs. If planning to buy physical gold, prioritize investment bars over gold jewelry, as jewelry comes with high premiums and significant repurchase discounts, making it less cost-effective for investment. Those with low risk tolerance should avoid gold futures, as leverage can amplify losses, and beginners may easily get trapped.
There is a need to be cautious about short-term correction risks. The current KDJ indicator shows that gold prices have entered an overbought area. Historical data indicates that when gold prices are above $4000, the probability of daily fluctuations exceeding 2% significantly increases. During the major price surge in 2019, 40% of investors were trapped due to chasing high prices during corrections. It is advised to set profit-taking and stop-loss levels and not to blindly follow the trend to increase positions.
Gold is no longer just a simple safe-haven asset; it has become a strategic choice for hedging against currency credit risks and optimizing asset allocation. The current market not only replicates the core drivers of 2019 but also has stronger fundamental support, with the logic for long-term upward trends remaining solid. Have you positioned yourself in gold? Let's discuss your investment strategy in the comments.
