Gold price pulls back from highs, should you buy?

Why Isn’t AI Showing Gold’s Safe-Haven Function in Geopolitical Conflicts?

As the recent US-Iran conflict continues, market risk aversion sentiment is gradually increasing, and international gold prices are fluctuating at high levels.

Just as gold prices hover at high levels, the central bank released a significant data point: by the end of February 2026, China’s gold reserves reached 74.22 million ounces, an increase of 30,000 ounces from the previous month, marking the 16th consecutive month of central bank gold purchases. (China Securities Journal 20260307)

Many friends might be curious: now that gold prices are so high, why is the central bank still “buying, buying, buying” and increasing holdings for 16 months in a row? What important signals does this send?

Some experts point out that the main reason the central bank continues to increase gold holdings is because, after the new US administration took office, the global political and economic landscape has undergone new changes. In other words, although gold prices have been rising at high levels, from the perspective of optimizing our country’s international reserve structure, increasing gold holdings has become increasingly necessary.

As of the end of December 2025, our country’s official international reserves mainly consist of foreign exchange reserves and gold reserves, with gold accounting for about 10.1%. This ratio is significantly lower than the global average of around 15%. Additionally, gold is recognized worldwide as a final means of payment. Central banks increasing gold holdings can enhance the credibility of our sovereign currency and create better conditions for the steady advancement of the RMB internationalization. (Economic Observer 20260309)

Overall, in the future, central banks’ gold accumulation remains a long-term strategic direction. This means that their gold purchases are more about asset allocation from a national strategic perspective, rather than reacting to short-term market trends or following the crowd to buy or sell.

However, attentive friends will notice that during this geopolitical turbulence, gold did not rise steadily but fluctuated sharply, with intraday volatility being very intense. This situation has led the market to question the safe-haven properties of gold. With ongoing conflicts in the Middle East, global risk assets are under pressure. Why hasn’t gold’s safe-haven function been demonstrated, and why did it even experience deep corrections?

Some analysts believe that the conflict between the US and Iran directly caused a surge in international crude oil prices. Markets worry that such oil price increases could drag down the global economy. Recently, global stock markets have plummeted, and as risk assets decline, concerns about short-term liquidity tightening have grown. Coupled with the further surge of the US dollar index, precious metals overall have been under pressure due to liquidity tightening.

Of course, this round of gold price fluctuations is not solely caused by geopolitical conflicts but is also influenced by several other bearish factors, including US macroeconomic data and changes in Federal Reserve policy expectations.

Everyone is probably aware that the US recently released a series of macroeconomic data, which directly disrupted market expectations of Fed policy and became key factors influencing gold and silver trends. For example, February’s US non-farm payroll data fell significantly short of expectations, and the unemployment rate was higher than anticipated, leading the market to believe that the Fed might cut interest rates in the future. Meanwhile, the escalating Middle East conflict and soaring oil prices have raised concerns about increasing inflationary pressures. (Huaxia Times 20260309)

At this point, many friends’ most pressing question might be: Will gold prices continue to rise in the future?

Xia Xia believes that although short-term liquidity tightness has put pressure on precious metals, the long-term bullish trend for gold remains unchanged. Currently, under the backdrop of excessive currency issuance and fiscal deficit monetization, the US dollar’s credit system is under challenge; coupled with frequent global geopolitical turmoil promoting diversification of asset reserves, the demand for gold as a safe asset continues to grow. As the trend of “de-dollarization” becomes more apparent worldwide, gold is expected to become a new pricing anchor. Therefore, in the long run, precious metals still have upward potential.

If you also believe in the long-term prospects of gold, consider looking at Xia Xia’s gold ETF Huaxia (518850).

This fund can track gold prices with a single click, avoiding the hassle of investing in physical gold or complex gold futures. It also supports T+0 trading (selling on the same day as purchase). The management fee plus custody fee for this product totals only 0.2%, which is quite low among similar products, helping investors participate in this gold rally at a lower cost.

Finally, Xia Xia must remind all investors: In this market environment, it is crucial to maintain reverence and risk awareness—risk control is always more important than chasing returns. Maintaining flexible positions and staying in the market long-term are key to coping with such uncertainties. Be sure to manage your positions carefully, protect your principal amid volatility, and only by surviving extreme market conditions can you seize long-term opportunities.

Risk Warning:

Fee structure: Investors trading these ETFs on the stock exchange incur mainly brokerage transaction costs and fund operation fees, including management fees of 0.5% per year and custody fees of 0.1% per year, deducted from fund assets. These ETFs do not charge subscription, redemption, or sales service fees; the subscription and redemption agents may charge commissions up to 0.5%, including fees from stock exchanges, registration, and settlement institutions.

Risk warning: 1. The above funds are equity funds mainly investing in constituent stocks of the target index and alternative stocks, with expected risks and returns higher than hybrid funds, bond funds, and money market funds, classified as medium-high risk (R4). The specific risk rating results are based on ratings provided by the fund manager and sales institutions. 2. These funds face risks such as deviation of index returns from the stock market average, index volatility, and divergence of fund portfolio returns from the index. 3. Before investing, investors should carefully read the fund’s “Fund Contract,” “Prospectus,” and “Product Information,” fully understand the risk-return characteristics and product features, and consider their own investment objectives, time horizon, experience, and asset status. Make rational and cautious investment decisions based on understanding the product and sales suitability opinions, and bear the investment risks independently. 4. The fund manager does not guarantee profits or minimum returns. Past performance and net asset value do not predict future results, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. 5. The fund manager reminds investors that the principle of “buyer beware” applies; after making an investment decision, the risks associated with fund operation, trading prices, and net asset value fluctuations are borne by the investor. 6. The registration of the above funds by the China Securities Regulatory Commission does not imply any substantive judgment or guarantee of their investment value, market prospects, or returns, nor does it mean that investing in these funds is risk-free. 7. These products are issued and managed by Huaxia Fund; distributors do not assume responsibility for investment, redemption, or risk management. 8. Markets are risky; investment should be cautious.