With gold prices reaching new highs, what trading logic should we focus on? | Moomoo research

In the vast realm of financial investments, gold has once again positioned itself under the market's spotlight with its unique attributes. Last week, the significant rise in gold prices not only set new historical records but also underscored its solid standing as a safe-haven asset amid global economic uncertainties.

Firstly, the intensifying expectations of interest rate cuts have directly fueled the rise in gold prices. The market widely anticipates that the Federal Reserve will implement rate cuts to counter economic slowdown risks, providing short-term support for gold prices. However, we must remain clear-eyed and recognize that the trade on rate cut expectations may be nearing its end, potentially limiting further upside for gold prices.

Secondly, the geopolitical tensions in the Middle East, particularly the conflict between Iran and Israel, have further heightened the market's demand for gold as a safe haven. The continued state of these tensions undoubtedly offers additional support for gold prices.

Nevertheless, we must also be wary of potential short-term pullback risks. With the rapid appreciation in gold prices, some investors might opt to take profits, which could trigger short-term market volatility.

Historical patterns suggest that gold prices exhibit a certain regularity surrounding preventive rate cuts. Typically, gold prices trend upwards 1-2 months before a rate cut, but they often undergo a period of adjustment following the initial rate cut. Therefore, it is reasonable to believe that the current trade on rate cut expectations may be in its late stages, and the momentum driving gold prices might gradually weaken.

In summary, while gold prices are likely to continue receiving support from rate cut expectations and geopolitical tensions in the short term, its monetary attributes and safe-haven demand will be the key factors sustaining its price in the long run. Investors considering gold investments should thoroughly assess these factors to make informed and rational decisions.