Transfer of Gold Pricing Power: When the Interest Rate Cut Cycle Encounters a Demand Structure Revolution

Behind the continuous record high prices of gold, a deep transformation in pricing logic is taking place. According to the latest assessment by CITIC Securities, the core driving force for gold prices to break historical highs by 2025 has quietly shifted from the traditional "dollar-interest rate" single anchor to a diversified game model dominated by marginal demand. This change not only explains why gold prices can rise against the trend when real interest rates are high but also reveals the underlying logic restructuring for future gold investments.

The Fragmentation of Pricing Frameworks: From Macro Indicators to Marginal Demand

In traditional asset pricing models, gold is regarded as a liquidity benchmark, with its price showing a significant negative correlation to the US dollar index and the real interest rates of US Treasury bonds. However, since 2024, this historical pattern has experienced systematic divergence—gold prices have remained strong and even reached new highs during periods of a strengthening dollar and high fluctuating real interest rates. This indicates that the pricing power of gold is shifting from institutional investors in Europe and the US to a broader range of global participants.

The root cause lies in the rigid constraints on the supply side. The global annual gold production has long been maintained at around 3,600 tons, making it difficult for the growth of mined gold to match the structural changes in demand. When the supply curve lacks elasticity, even a slight fluctuation in marginal demand can trigger a dramatic price reaction, which is the core characteristic of the current gold market.

Demand Triangle: Deconstructing the Three Reshaping Forces of the Gold Market

CITIC Construction Investment breaks down gold demand into three dimensions, each showing unprecedented resilience in 2025:

1. Consumer Demand in the Private Sector: The Rise of the Eastern Market

The physical gold demand in the Asia-Pacific region, including India and China, has evolved from seasonal fluctuations into a persistent allocation force. Unlike Western investors, Eastern buyers are less sensitive to price and place more emphasis on the long-term value preservation function, which has weakened the technical correction amplitude of gold prices.

2. Private Sector Investment Demand: The Paradigm Shift of ETFs

Gold ETFs in Europe and the U.S. were once the dominant players in marginal demand, with their investment framework highly tied to the actual interest rates of U.S. Treasury bonds. However, data from 2025 shows that even if U.S. real interest rates remain in the range of 1.5%-2%, the outflow pressure on ETF funds has significantly weakened. This indicates that institutional investors are adjusting their pricing models to incorporate variables such as geopolitical premiums and rising inflation targets.

3. Official Gold Purchase Demand: The "De-Dollarization" Game of Central Bank Reserves

This is the most critical force in reshaping the gold pricing power. In 2024, gold will surpass the euro with a 20% share, becoming the second largest reserve asset for central banks globally, next to the dollar's 46%. This buying behavior is not driven by short-term trading but is a strategic hedge based on the weakening of the dollar's credit system.

The fundamental logic is that the proportion of U.S. government debt to GDP continues to rise, combined with the risk of imported inflation caused by tariff policies, which undermines the long-term attractiveness of dollar assets. Gold, as a "decentralized" borderless currency that does not rely on the credit of a single country, has become a core tool for central banks to achieve asset diversification and hedge against geopolitical risks.

The transmission mechanism of the interest rate cut cycle: Why is this time different?

The monetary policy of the Federal Reserve remains an important variable for gold, but the path of its influence has fundamentally changed:

Traditional transmission chain: Interest rate cut → Nominal interest rate decline → Real interest rate decrease → Opportunity cost of holding gold decreases → ETF funds inflow → Gold price rises.

The new transmission chain in 2025: Rising expectations of interest rate cuts → Intensified concerns over dollar credit → Central banks accelerating gold purchases + Surge in private allocation demand in Asia → Structural expansion of marginal demand → Gold prices rise, breaking free from interest rate constraints.

Currently, after the U.S. inflation has fallen to around 3%, it is trapped in the "last mile" dilemma, and the resilience of the labor market is beginning to weaken. The market anticipates an 84.7% probability of a 25 basis point rate cut in December, with the possibility of continuing to cut rates by 50-75 basis points in 2026. However, the key is not the magnitude of the rate cuts, but the fact that the rate cuts themselves reinforce the expectation of "easing-devaluation-reserve diversification" as a self-fulfilling prophecy.

JPMorgan predicts that gold prices will rise to $4,500 per ounce by mid-2026, while Goldman Sachs has raised its target for the fourth quarter of 2026 to $5,055 per ounce. Behind these predictions is a profound understanding of the resonance between the interest rate cut cycle and the demand revolution.

Investment Strategy: Capture Certainty Amidst Volatility

Although the long-term trend is clear, short-term risks cannot be ignored:

Tactical Opportunities:

• Technical pullback intervention: If the gold price falls back to around $4000/ounce due to liquidity tightness or seasonal outflows from ETFs, it can be regarded as a window for increasing positions.

• Gold-Silver Ratio Arbitrage: The current gold-silver ratio is in the high range of 80-100. As real interest rates decline, silver may see a rebound due to its valuation advantages and recovering industrial demand.

Strategic Allocation:

• Position Management: Gold should be used as a hedging tool in a portfolio rather than a speculative target, and it is recommended that the allocation ratio be controlled within 10%-15% of total assets.

• Pay attention to leading indicators: The Grayscale GBTC premium turning positive and the Federal Reserve's reverse repo scale dropping below $500 billion are signals of substantial improvement in liquidity.

Maximum risk point:

If the Federal Reserve is forced to pause interest rate cuts or even shift direction due to a rebound in inflation, it will severely impact the market's expectations for rate cuts, potentially triggering a short-term adjustment in gold prices of 15%-20%. However, considering the current resilience of the demand structure, this pullback is likely to be a strategic buying opportunity rather than a trend reversal.

Key conclusion: Gold is undergoing "pricing democratization".

The power shift in the gold market has become irreversible. ETF investors in Europe and the United States are losing marginal pricing power, while the "dual-core drive" of global central banks and the Asian private sector is constructing a new price discovery mechanism. The role of the Federal Reserve's rate-cutting cycle is no longer to directly lower holding costs, but to catalyze a systemic reassessment of the dollar credit system by the market.

Within this framework, the gold bull market of 2025-2026 is essentially a vote of confidence in the existing international monetary system. When rigid supply meets structural expansion in demand, the upward price potential will no longer be constrained by a single macro variable, but rather depend on how fast and deep the process of diversifying global reserve assets occurs. For investors, understanding the changes in this underlying logic is more important than accurately predicting the timing of interest rate cuts. #成长值抽奖赢iPhone17和周边 #十二月降息预测 #内容挖矿赚丰厚返佣 $BTC $ETH $SOL