Against the backdrop of global economic and political uncertainty, gold, as a traditional safe-haven asset, is seeing a new round of attention. From the soaring fiscal deficit in the United States to the repeated fluctuations in trade policy, from the unclear interest rate path of the Federal Reserve to the continued increase in holdings by central banks around the world, multiple factors have jointly pushed gold prices to show strong resilience in a complex environment. This strengthening is not the result of a single variable, but a market picture woven together by the accumulation of fiscal risks, the increase in policy uncertainty and the reconfiguration of global capital.

1. Fiscal and political risks: the core logic of long-term support for gold

The increasingly severe fiscal situation in the United States is becoming an underlying factor supporting gold prices. The World Gold Council pointed out that with the passage of the "Big, Beautiful Act", if the Trump administration fails to achieve its growth expectations, the United States will add $3.4 trillion in debt in the next decade and the debt ceiling will increase by $5 trillion, which will make the US debt of $36.2 trillion even worse. Coupled with the political atmosphere heated up by Musk's threat to establish the "American Party", the dual accumulation of fiscal and political risks has triggered a global capital reconfiguration.

This risk transmission path is clearly visible: on the one hand, structural changes in the U.S. Treasury market have exacerbated market concerns - the demand for U.S. Treasury bonds by the Federal Reserve and foreign governments has continued to decline, and foreign private investors have become the largest non-official holders. Such investors are more sensitive to prices and may exacerbate bond market volatility; on the other hand, the widening gap between U.S. Treasury yields and interest rate swap fixed rates reflects the market's increased sensitivity to U.S. fiscal sustainability. Historical experience shows that when fiscal concerns intensify, investors tend to turn to gold, pushing its price higher.

The World Gold Council stressed that the loose fiscal policy of the past two decades has put the United States in a vulnerable fiscal position, and the "Big, Beautiful Act" may further amplify this risk. Although the possibility of a full-scale fiscal crisis is low, a series of "rolling mini-crises" (such as debt ceiling games and policy implementation deviations) are more likely to become the norm, and this continued uncertainty will provide long-term support for gold demand.

2. Trade frictions and policy fluctuations: catalysts for short-term market sentiment

The Trump administration's trade policy is becoming an important variable that stirs up market sentiment. Recently, the United States announced a new 50% tariff on copper imports and made it clear that "the exemption period will not be extended and retaliatory measures will be responded to by increasing taxes." This move directly triggered market concerns about the slowdown in global economic growth and accelerated the inflow of safe-haven funds into the gold market. Data shows that gold prices have rebounded from the recent low of one and a half weeks, and the short-term upward momentum is significant.

Uncertainty in trade policy also indirectly affects gold by affecting economic expectations. The World Gold Council pointed out that consumer confidence and business investment willingness are being impacted by the swings in trade policy, which is triggering the reallocation of global capital from US assets. Investors are beginning to look for alternative safe-haven tools to US Treasury bonds, and gold has become an important option. This capital flow not only pushed up gold prices, but also linked to the weakening of the US dollar: the US dollar index fell from a two-week high to around 97.40, further enhancing the attractiveness of gold denominated in US dollars.

3. Fed policy and interest rate game: a new market normal with traditional logic reconstructed

The Fed's interest rate policy path has always been a key variable affecting gold prices, but since 2022, the traditional logic of "interest rates and gold prices are inversely correlated" is being broken. Although the current real interest rate in the United States has risen to more than 2%, gold prices have risen against the trend. Behind this phenomenon is the balance of multiple factors: investors' urgent need for risk relief, the continued gold purchases of global central banks, and the market's expectations of a shift in the Fed's policy. The minutes of the Fed's June meeting showed that although most officials believed that there was no need to cut interest rates immediately, it was generally expected that if tariffs pushed up inflation, interest rate cuts might be initiated within the year.

The strong employment data in June has caused some investors to reassess the necessity of rate cuts. This contradiction makes interest rate expectations full of variables. The market's bets on a rate cut in July have weakened, but the possibility of easing this year remains. This uncertainty has pushed the 10-year Treasury yield down. The strong demand for the 10-year Treasury auction in the United States on Wednesday and the sharp drop in yields have further strengthened the allocation value of gold. The World Gold Council analysis pointed out that this new normal of "interest rates and gold prices rising together" is essentially the market's pricing of "fiscal risks exceeding the impact of interest rates." When investors' concerns about the sustainability of US fiscal policy intensify, gold's safe-haven properties will outweigh the holding cost pressure brought by rising interest rates.

4. Central Bank Gold Purchases and Market Structure: A Historic Change on the Demand Side

The continued gold purchases by central banks are becoming another important pillar supporting gold prices. Data show that the demand for gold reserves by central banks in emerging markets has grown significantly, with multiple factors including diversification of foreign exchange reserves and hedging geopolitical risks. The World Gold Council pointed out that since 2022, the pace of gold purchases by central banks around the world has significantly accelerated. This trend contrasts with the relative weakening of US fiscal credit, reflecting a deep adjustment in the structure of global reserve assets.

From the perspective of market structure, this change in demand is of symbolic significance: the gold market, which was previously dominated by private investors, is increasingly influenced by the behavior of official institutions. Central banks in emerging markets have reduced their reliance on US dollar assets by increasing their gold holdings. This "de-dollarization" trend echoes the expansion of the US fiscal deficit, providing medium- and long-term support for gold prices.

5. Short-term fluctuations and long-term trends: Gold’s position in uncertainty

From the perspective of short-term market performance, gold price fluctuations are significantly affected by technical and emotional factors. Currently, the gold price is approaching the 100-period simple moving average (around $3,335/ounce). If it breaks through this key resistance level, it may trigger short-covering and push the gold price towards $3,400/ounce; if it falls below $3,300, it is necessary to pay attention to the support levels of $3,282 and $3,247. This volatility reflects the market's sensitive response to short-term policy signals.

However, in the long run, the core driving force of gold still comes from the structural uncertainty of the global economy and politics: the continued expansion of the US fiscal deficit, the volatility of trade policies, the "discretionary" tendency of the Federal Reserve's policies, and the divergence of global capital's confidence in US dollar assets. The World Gold Council concluded that interest rates and geopolitics are important, but fiscal concerns have become a new variable that cannot be ignored - in the context of a series of "rolling mini crises" that may occur frequently, the role of gold as a "backup safe-haven asset" will become more prominent.

Whether it is the accumulation of long-term fiscal risks or the disturbance of short-term policy games, the strengthening of gold is not only a temporary release of market sentiment, but also a re-pursuit of certainty by capital in the process of reconstructing the global economic order. This pursuit may be the key to understanding the current gold market.