Transcription
Actually, year-to-date, gold is still showing a slight negative return. It has outperformed many assets globally, but if we compare its decline from its all-time high, it's quite a mess. A 26-27% drop is certainly not a pleasant sight. However, central banks worldwide continue to buy gold. In the first quarter, central banks globally purchased approximately 244.44 tons, which is an increase from the same quarter of the previous year. This can also be considered a purchase volume higher than the historical average. This indicates that buying pressure from central banks remains strong. What's interesting is China. China continues to buy, and at a quite good level. It's on slide 9. In May, China bought gold for the 19th consecutive month. What's also interesting is that the purchase volume has clearly increased compared to the previous 2-3 months. It's evident that the period when gold rose was throughout 2025. If you look at the histogram, China was buying, but buying very little because gold was expensive. So they bought less. However, during the period when gold was falling, in the past 2-3 months, it's very clear that China came in to buy the dip in the gold market. When gold fell, the Chinese central bank doubled its purchases, 2-3 times more than in the previous months. This is a good sign because China's gold holdings in its foreign exchange reserves are still very low, only about 9% compared to developed countries which hold around 60%. If China alone were to increase its gold holdings from 9% to the average of 20%, it would amount to thousands of tons of purchases. Therefore, we still believe that China will likely continue to buy gold. But it's not just China that is buying. The real big buyer is not China, but the Polish central bank, which has been buying. This year, they are the number one buyer among central banks worldwide. Looking ahead, the World Gold Council also conducted a survey. They asked 76 central banks globally. The questions were numerous, but the key question we want to discuss is the first one: What do you think will happen to the amount of gold reserves held by central banks worldwide in the next 12 months? 89% of the respondents said that the gold reserves of central banks worldwide will increase. 89% think it will increase. No central bank thinks global gold reserves will decrease. Now, after asking about the world, they asked, "What about you? What will your treasury department do?" 45% think their central bank will increase gold reserves. 54% think it will remain stable, neither increasing nor decreasing. Only 1% might reduce their gold holdings. Therefore, the majority, 99%, think it will either remain stable or increase, right? This is a good sign that, okay, the past was like this: in 2022-2024, they bought 1,000 tons, and in 2025, they bought over 800 tons. Looking forward to the future, we believe these factors, the pillars of the gold market, will remain. This is one factor that helps create a floor for the gold market.
Yes, but will the strength of these pillars push gold to an all-time high again, or will it still be insufficient?
I believe it's still insufficient. It might not be pleasant to hear, but I believe these factors will limit gold's downside. However, we must accept that what will push gold to adjust higher will be the buying from speculators. Flows need to occur from multiple sides simultaneously. Central banks alone, with their strategic, structural purchases, will not create significant volatility. And the buying pressure from the speculative market, I must say, has not arrived yet. The net long positions of speculators in the futures market are currently at a low level. Is this a negative signal? I would say no. Simply put, the market still holds net long positions, but the net long positions have decreased. I see this as a positive signal, even. Because that means the Gold Futures market has not been fully utilized. Simply put, it's not yet saturated. If positive factors emerge, there will likely be long futures buying to push positions higher. Therefore, there is still room for position increases, but the market is waiting for factors. I believe the Fed's monetary policy will likely be a key factor. Another interesting point is that many people think the US-Iran war is unlikely to escalate further. We saw news over the weekend, right? For example, there were military attacks between them, Iran closed the Strait of Hormuz, and by Monday, everything returned to the previous situation, including the oil market not reacting as positively as before to this news. What does this indicate? The market is pricing in that the peak of the US-Iran conflict has likely passed, and the situation is likely to ease. Many people are looking ahead, thinking that Trump might do something again, to put it humorously in the market. Everyone thinks that with the US-Iran situation resolved, Trump will likely introduce something new to create market buzz. Many predict it will be a trade war, a trade war might come back again. If a trade war truly returns, it actually affects the market in two ways. If inflation increases due to import tariffs, then we need to be careful that gold might fall due to interest rate hikes. Conversely, if it's like last year, where a trade war occurred but import tariffs didn't drive inflation, meaning inflation didn't increase from the trade war, right? But it caused concerns about the dollar, and the dollar weakened again, like last year, due to the "sell America" sentiment. In this situation, a trade war could also become a positive factor in the gold market this year.
Yes, regarding YLG, what is your gold price target for the end of this year? Because many research firms have also lowered their targets quite significantly.
We have also adjusted ours because the situation has changed, so forecasts must be adjusted. We don't foresee a deep downside, but we believe that if the Fed raises interest rates this year, the chance of gold reaching an all-time high this year is lower. Therefore, we have adjusted the gold price target downwards. The upper range we see as possible is around $2,489 to $2,520 per troy ounce. This is a target based on the forecast that the Fed might raise interest rates approximately once, not more than twice, this year. Therefore, the upper limit has been lowered. However, conversely, if any event occurs where the Fed cannot raise interest rates, the chance of gold soaring immediately after this cycle ends still exists, but we give this forecast a relatively low weight. We still believe that, looking at the trajectory in this chart, a sideways movement in a triangular pattern, indicated by the blue line, is the most likely scenario. Even with sideways movement, at certain points, we are likely to see a significant rebound in gold due to technical factors.
Yes, but the picture for gold this year has been very volatile. At the beginning of the year, it surged like a rocket to an all-time high. But since the war, it has gradually declined, falling below 4,000. In this context, is gold still considered a safe-haven asset?
It is indeed a safe-haven asset. Let's look at it this way: what are the characteristics of a safe-haven asset? Long-term returns are positive, right? If we look back, even though gold has fallen sharply this year, the average annual return since 1971 has been around 9-10%. Therefore, gold remains a source of long-term returns. The second characteristic of a safe-haven asset is that when risks or crises occur, gold tends to rise. This is why many are concerned, asking why gold has fallen so much. This is because of the third point: what happens in the gold market is that gold has very high liquidity. And gold, I must say, is easy to buy and sell, serving as a source of liquidity in the market. Therefore, anything that happens when the market desperately needs liquidity, gold tends to be sold off. This is what has happened in the gold market, both currently and in the past. For example, if you recall, during COVID-19, gold fell along with the stock market and cryptocurrencies in March 2020. It fell sharply, too. The market was in extreme panic. Why hold gold when there's COVID? How can you hold it? Everyone just wanted cash and dumped everything. Similarly, in this round, the fall in gold is believed to be partly due to the demand for liquidity, causing gold to decline. Has gold lost its safe-haven status? I would say it hasn't lost it, but gold is not just a safe haven. Don't forget that gold also has the status of an investment asset. Therefore, in the market, we cannot view gold solely as a safe-haven asset. We must see that besides being a safe haven, gold is also a financial asset. If technicals indicate it should be sold, then you must sell. Don't use one factor to make investment decisions and another. For example, you can use the thesis that gold is a hedge if you hold gold for the long term, holding it without thinking, as a portfolio diversifier. This is acceptable. The timeframe is correct. But if you are investing in gold for the short term and want to speculate, you must view gold as a financial asset, right? If market factors change, you must change your trading approach as well. There should be take-profit points, profit-taking points, and clear strategies. This should enable everyone to survive in such a volatile market.