Recently, I paid attention to the trend of international gold prices and found that gold has fallen again this week, mainly because the US dollar is strong and the interest rate hike expectations are heating up. Market expectations for rate cuts are decreasing, which has put significant pressure on gold prices.

I looked at analysts' opinions, and they said that the situation in the Middle East is still under ongoing attention, and energy issues are unlikely to be quickly resolved in the short term. Rising oil prices have boosted inflation expectations, which in turn has squeezed the room for central banks in various countries to cut interest rates. Although gold itself has an inflation-hedging property, it becomes somewhat useless in a high-interest-rate environment because it does not generate interest income. During a rate hike cycle, the opportunity cost of holding gold indeed increases.

There is also an interesting detail: Turkey's central bank has recently significantly reduced its gold reserves. Last week, they decreased by more than 69 tons, and in two weeks, they have reduced over 118 tons. They said it was to mitigate the impact of geopolitical conflicts. This large-scale reduction is also affecting market sentiment.

Demand in Asian markets is quite differentiated. In India, gold trading prices have shown a premium for the first time in two months because falling gold prices have stimulated buying. However, buyers in China are more cautious, all waiting for further price corrections, and gold premiums have also slightly declined. It seems that the market's reaction during the rate hike cycle remains relatively rational.