On August 12th, Xu Zhiyan from Huaxia Fund shared his views on the gold market in a program. Xu mentioned that after a certain adjustment, gold has returned to its own track in this round of market fluctuations, causing financial turmoil under the influence of the significant market movement. Gold is in a very good configuration cycle for 3 to 5 years, and one of the core reasons is that the Federal Reserve is expected to be in a rate-cutting cycle for the next three years, which is a reinforced judgment at present. After gradually reaching a new platform, gold may consolidate for a period of time as investors progressively digest and the market supply and demand gradually reach a new balance. Gold is a dynamic pricing mechanism that depends on the core logic of whether currency is loose, whether it is in excess, and whether the value of currency can resist inflation in the medium to long term. From the perspective of developed countries in Europe and America, there may be excess currency. After a significant easing and rate hike, it may restart the easing trend. Therefore, it is crucial to assess cyclical elements, especially in increasing allocation during the favorable period for gold. Xu Zhiyan hinted that currently, gold is unfolding the logic of the first wave of the market. He used the example of "Starting a rate-cut cycle in 2019, gold hitting a new high after three months of fluctuations" to suggest "with the opening of the rate-cut cycle, gold may welcome the second wave of the market." Specifically, Xu Zhiyan pointed out that after the correction, gold has returned to its own track. Gold investment has recently attracted attention from the global market, particularly due to the significant market fluctuations caused by so-called Yen carry trades last week, during which gold actually declined. The most crucial reason for this was thought back to March 2020 when liquidity crises occurred due to the global pandemic, where the first response was to resolve the immediate issues. When liquidity problems arise, the first response is to protect oneself, meaning many people sold off highly liquid assets that could be immediately liquidated, even at a significant cost, to repay margins. Similar situations occurred in 2018 and 2016, especially in 2008, when there was a massive sell-off of gold in the market, leading to a liquidity crisis as the primary contributing factor. In such cases, instead of focusing on risk prevention with gold, the primary concern was the survival of other assets, selling off immediately liquidated assets to repay margins at the time of liquidity difficulties. Therefore, as observed in this round of gold fluctuations, after a certain adjustment, gold has returned to its own track under the influence of significant market movements causing financial turmoil. Gold is a highly liquid, high credit-rated asset with global acceptance that can serve as a risk hedge and, more importantly, can be instantly liquidated, providing security for other assets. Therefore, gold assets are often described as ballast, the last line of defense against risks. According to Xu Zhiyan, gold is currently in a very favorable configuration cycle for 3-5 years. The prospect for gold in the long term is promising, supported by the interest rate cuts in the United States. At the beginning of the year, it was estimated that gold would be in a very good configuration cycle for 3-5 years, with one of the core reasons being the Federal Reserve's expected rate cuts over the next three years, which is currently a reinforced judgment. In other words, the expectation of the Federal Reserve starting a rate-cut in September reinforces the judgment that a rate-cut cycle will be initiated. Whether it is 25 basis points or 50 basis points, it is not the most crucial for gold itself, but the key is the initiation of a rate-cutting cycle. The second point is central banks' increasing holdings of gold. Recent data indicates that central banks continue to increase their gold reserves, buying 180 tons in the second quarter and nearly 300 tons in the first quarter. In total, close to 480 tons were bought, which, if close to 1000 tons for the whole year, will be historically a significant amount. Gold serves to hedge risks, resist currency over-issuance, downturns in the global economy, and debt monetization, all of which, in the long term, pose no problems. According to the gold analysis framework, from a medium-term perspective, it is closely related to real interest rates and the Federal Reserve's interest rate decisions. Xu Zhiyan believes that after stepping onto a new platform, the gold price will consolidate for a period. The trading attributes are also a significant focus. Currently, trading may be more short-term in nature. The net long positions in futures are indeed relatively high, raising concerns that this might be an overbought condition. Excessive long positions often carry risks. Technically, after a rally, people are cautious of potential risks, such as market fluctuations when approaching key levels like breaking through 2500. Gold has indeed experienced some volatility, but how to correctly interpret the fluctuations of gold and their relation to investments? Gold is a financial asset, the fourth largest globally, actively traded. As a result, fluctuations will naturally occur due to the active trading of futures positions. These fluctuations will magnify with market elements, such as last week's Yen carry trades, speeches from the Federal Reserve, fluctuations in other market assets. It is absolutely incorrect to consider gold as a fixed-income asset. In the long term, its returns are indeed attractive, often discussed around 7% to 8% annualized for AU9999, but it remains a volatile asset, with fluctuations equivalent to 2/3 of stocks or around 60%, much larger than bonds. So how should one understand this? Firstly, in terms of the balance between medium to long-term gains and its volatility, gold remains an asset with high value. Its natural negative correlation with other assets makes it a premium target for diversified asset allocation, illustrating its scarcity. Moreover, some assets, such as overseas assets, Nasdaq, or US Treasury bonds, either require a significant premium to purchase or face tight market conditions, as widely known in the market currently. This underlines the importance of gold as a hedge against risks, currency over-issuance, global economic downturns, and the monetization of debts, all of which, in the long term, present no problems. Considering the gold analysis framework from a medium-term perspective, it remains closely associated with actual interest rates and the general direction of the Federal Reserve's interest rate meetings. Xu Zhiyan believes that after stepping onto a new platform, the gold price will consolidate for a period. Examine the trading attributes that attract significant attention for now. Trading may be more short-term in nature at present. The net long positions in futures are indeed relatively high, raising concerns that this might be an overbought condition. Excessive long positions often carry risks. Technically, after a rally, people are cautious of potential risks, such as market fluctuations when approaching key levels like breaking through 2500. Gold has indeed experienced some volatility, but how to correctly interpret the fluctuations of gold and their relation to investments? Gold is a financial asset, the fourth largest globally, actively traded. As a result, fluctuations will naturally occur due to the active trading of futures positions. These fluctuations will magnify with market elements, such as last week's Yen carry trades, speeches from the Federal Reserve, fluctuations in other market assets.Can't get the right amount.Gold is not only available in quantities, but it is also a very good asset for hedging risks, and its own medium to long-term properties are also very good. In fact, volatility is an inherent attribute of gold, as well as an internal factor that causes negative correlations with other asset classes. Therefore, everyone should understand the volatility of gold correctly. Secondly, how to understand the current price of gold, many people feel that the price is quite high. The price is already around two to four thousand, so is gold good or bad? The pricing of gold is actually quite complex and multifaceted. It is also a global macroeconomic microcosm. There is no fixed pricing formula for gold, unlike the stock market with value investing, the DDM model, and bonds with cash flows that can determine whether it is expensive or cheap. The final pricing of gold is determined by supply and demand. If something is scarce, gold is actually difficult to mine and discover reserves. The demand in the market is still there, but prices have seen some increases, so it is important to understand gold correctly. After gradually reaching a new platform, it may consolidate for a period of time, with investors gradually digesting it, and the market supply and demand gradually reaching a new balance.