Guojin Securities: In the long term, gold is expected to usher in a new bull market

Guojin Securities pointed out that historical experience shows that gold usually performs well in a stagflation environment, but this round of the market focused on pricing inflation factors while ignoring the economic “stagnation” pressure. The U.S. economy has shown signs of weakening growth, and high oil prices may further accelerate the onset of recession. If economic stagnation resonates with a downturn in the capital markets, the disparity in liquidity expectations is likely to become a trigger for a rebound in gold. In the long term, the consensus in the market is that the overall national strength of the United States is shifting from prosperity to decline, and gold is expected to enter a new bull market.

The full text is as follows

Guojin Macro Song Xuetao｜Looking at Gold Again After the Shock: From Inflation to Stagnation in the Macroeconomic Landscape, Long-Term Opportunities in the Shift of U.S. National Power

Core Viewpoints

Since March, international gold prices have experienced a rapid correction, which differs from the adjustment in late January caused by high trading congestion and expectations of balance sheet reduction. Before this round of adjustment, the implied volatility of gold had departed from extreme highs, with core driving factors shifting to macro variables. Initially impacted by the outbreak of the U.S.-Iran war, oil and the dollar surged sharply, triggering a liquidity crisis, and the tightening of offshore dollar liquidity led investors to sell gold for cash; subsequently, high oil prices fueled concerns over imported inflation, increasing expectations for interest rate hikes among multiple central banks, rising U.S. Treasury yields increased the cost of holding gold, and speculative funds such as hedge funds continued to retreat, with CFTC speculative long positions in gold declining since December 2025, and gold ETF holdings also cooled as expectations for interest rate cuts receded.

In the short term, although technical indicators for gold show overselling, the London gold RSI has fallen to an extreme value of 21.1, and the gold-oil ratio has retreated to near long-term central levels, the reversal trend has not yet been clearly established, and the KDJ has not shown a bullish crossover signal for gold, with prices still probing along the lower Bollinger Band line. At the same time, implied volatility for gold continues to rise, and the market’s uncertainty expectations regarding its price path remain. Overall, major asset classes are in a rising wave market, highlighting the importance of cash assets. From a support level perspective, 4300 points, 3900-4000 points, and 3400-3500 points form different levels of key support, and it is recommended to maintain a wait-and-see approach with appropriate left-side positioning in the short term, patiently awaiting stabilization in volatility.

Historical experience shows that gold usually performs well in a stagflation environment, but this round of the market focused on pricing inflation factors while ignoring the economic “stagnation” pressure, leading to a temporary pullback in gold. Currently, the U.S. economy has shown signs of weakening growth, with a slowdown in private durable goods consumption spending, the labor market facing upward pressure on unemployment rates, and non-farm payroll additions close to zero; high oil prices may further accelerate the onset of recession. If economic stagnation resonates with a downturn in the capital markets, the Federal Reserve may reassess recession risks, and the possibility of restarting easing policies cannot be ruled out. This disparity in liquidity expectations is likely to become a trigger for a rebound in gold.

In the long term, the protracted U.S.-Iran war poses multiple shocks to the credibility of the dollar. The United States has not demonstrated overwhelming military superiority in the war, NATO member responses have been limited, and the dominance of both Eastern hegemony and the dollar hegemony is facing weakening; Iran’s countermeasures to block the Strait of Hormuz may disrupt the “oil-dollar” chain; at the same time, the high-interest-rate environment combined with increased military spending due to the war exacerbates U.S. fiscal pressure, hindering the debt resolution process and further eroding the credibility of the dollar. The clearing of speculative bubbles in gold in the short term lays the foundation for long-term increases; if the consensus in the market is that the overall national strength of the United States is shifting from prosperity to decline, gold is expected to enter a new bull market.

Risk Warning

1) Geopolitical risks exceed expectations, 2) U.S. fiscal stimulus exceeds expectations, 3) Limited data availability.

(Source: Yicai)