š The market closed lower again this week, but the pullback has presented an excellent entry point. From a valuation and long-term perspective, gold has entered a favorable allocation range.
šÆ Weāve compiled some key questions about the current market and shared them here, hoping to provide helpful insights.
š° Is it time to add to gold positions? How to navigate a fast-rotating market?
š Since the Middle East conflict, gold has corrected by up to 16% due to profit-taking after overheated risk aversion, and expectations of delayed Fed rate cuts or even potential hikes.
š„ It then rebounded in oscillation, returning to a “risk-aversion logic”. However, last Thursday, following Trumpās speech, crude oil surged to nearly $110, while gold was sold off sharply. On Thursday night, Iran announced it had drafted a Strait of Hormuz navigation agreement with Oman, signaling a conditional mechanism for passage. This slightly reversed market sentiment, narrowing goldās losses and closing at $4,700.
š„ In the short term, the U.S.-Iran conflict and oil prices continue to drive goldās trend. Short-term movements are honestly hard to predict; a further pullback cannot be ruled out, but dips remain a buying opportunity. We suggest setting aside capital to buy in batches near $4,000 (an extreme scenario, around the annual moving average; $4,100 previously acted as strong support).
š„ The reason we are confident in buying on dips is that gold remains a viable allocation from a medium-to-long-term perspective.
š„ First, it hedges against inflation. When the oil price central level rises and feeds through to global CPI, real interest rates (nominal rates minus inflation) will be suppressed, reducing the opportunity cost of holding gold ā a positive for the metal.
Moreover, if high oil prices lead to an economic slowdown, the Fed may still cut rates (similar to the 1990 oil crisis, when the Fed cut rates despite deteriorating economic conditions), which also benefits gold.
š„ Second, the long-term weakening of U.S. dollar credit. U.S. national debt has exceeded $38 trillion with persistent high deficits, relying on new debt to roll over old obligations. The U.S. dollar has become a geopolitical tool, making the world aware that dollar-denominated assets risk seizure or freezing at any time. The dollarās monopoly as the dominant global currency is breaking down, further eroding its credit premium.
ā Third, geopolitical risks will become normalized in the future, and gold is a natural safe-haven asset. Increasing gold reserves has become a key choice for non-U.S. central banks to hedge against sanction risks and strengthen financial security.
š° Based on the above logic, gold remains an essential part of our portfolio. For investors who havenāt reached their target allocation, we recommend adding positions in batches on dips, with a suggested gold allocation of 5% to 15%.
ā Trying to trade frequently in a fast-rotating market essentially stems from fear of missing every rise and fall. But historical data shows: the faster the rotation, the greater the erosion from chasing gains and selling losses. The low subscription-redemption efficiency and high transaction costs of over-the-counter funds actually force investors to avoid short-term timing ā a strategy with the lowest win rate.
šÆ Therefore, the right approach is not “how to catch every rotation and raise trading frequency”, but “what kind of portfolio can better adapt to a volatile market”. For ordinary investors, a practical and effective framework is to build a core position focused on stability.
šŖ Position adjustment: In a rotating market, the biggest risk is not missing out on a sector, but having an overall position that is too heavy or too light. You can maintain a core position, and manage the remaining capital with short-term pure bond funds, interbank certificate of deposit index funds, or money market funds. When the market experiences a systemic oversold, quickly shift to equity assets; switch back after a rebound. This way, your “agility” lies in capital allocation, not random switching between sectors.