Western Securities (002673) strategist Cao Liulong pointed out in an article that although gold prices have repeatedly hit new highs, the market remains divided. Some investors warn of the risk of a pullback due to crowded gold trading and short-term overbought conditions. However, we believe that central bank gold purchases are the strongest guarantee for gold prices to continue reaching new highs. Since the onset of deglobalization in 2016 amid Sino-U.S. tensions, the proportion of U.S. bonds in global foreign exchange reserves has significantly declined, while the share of gold has risen substantially. Since 2022, global central bank gold purchases have further increased and have become desensitized to gold prices. In other words, in the face of central bank gold purchases, crowded gold trading and short-term overbought conditions are merely noise. A survey by the World Gold Council shows that 95% of global central banks indicated they will continue to increase their gold holdings over the next 12 months.

After the collapse of the Bretton Woods system in the early 1970s, the United States managed to establish the "petrodollar" and restore the credibility of the U.S. dollar in less than a decade by the early 1980s, largely thanks to its strong industrial capacity and global "hegemony" at the time. However, with the hollowing out of U.S. manufacturing today, if the existing "petrodollar" system collapses, it is highly unlikely that either the United States or China alone will be able to rebuild a global reserve currency system. The future may see a prolonged era without a single reserve currency, and gold is expected to embark on a long-term bull market.