Precious Metals Industry: Short-Term Pressure Does Not Change Long-Term Allocation Value

Against the backdrop of an evolving global economy, the precious metals market is experiencing a mix of short-term disruptions and long-term trends. Since 2026, driven by geopolitical conflicts, shifting inflation expectations, and monetary policy adjustments across major economies, gold prices have faced pressure, retreating to the $4000-4200/oz range. However, beneath surface fluctuations, the fundamental logic supporting medium- to long-term value remains solid. Central banks continue to increase holdings, and the long-term weakening of the USD credit system remains unchanged. For investors, understanding the causes of short-term volatility and the certainty of medium- to long-term trends is key to seizing precious metals allocation opportunities.

1. Short-Term Pressure: Phased Correction Amid Multiple Factors

In early 2026, the sudden escalation of the US-Iran conflict pushed international oil prices up sharply, significantly raising global inflation expectations. Meanwhile, US employment data continued to beat expectations, and labor market resilience shifted market expectations for Fed policy from rate cuts to a prolonged tightening stance. These two forces combined to put temporary pressure on dollar-denominated gold: higher oil prices raise production and living costs, potentially forcing central banks to maintain high rates to curb inflation; strong employment data reduces the need for the Fed to ease quickly, keeping real rates high and diminishing gold's appeal as a zero-yield asset.

Note: The chart above reflects the relationship between recent gold price fluctuations and macro factors, showing the combined effect of short-term disruptions and long-term trends.

In terms of market performance, gold prices corrected approximately 8% to 10% from historical highs in the first half of 2026, entering a range of $4000-4200/oz. This correction is a normal adjustment to market overreaction to short-term information and does not change the long-term supply-demand dynamics of precious metals. Historically, such phased adjustments often provide better entry points for medium- to long-term investors.

2. Medium- to Long-Term Logic: Dual Drivers of Central Bank Purchases and USD Credit Weakening

Global central bank gold buying remains strong, with clear strategic allocation intent. According to latest data, in Q1 2026, global central banks purchased 243.7 tons of gold, up from last year. The People's Bank of China has increased gold reserves for 19 consecutive months, reflecting emerging markets' strong desire to optimize foreign reserve structures and reduce dependence on the USD. This trend is not short-term but a natural result of global economic multipolarization. Gold, as a hard currency without sovereign credit risk, plays a 'ballast' role in central bank portfolios.

The long-term weakening of USD credit is hard to reverse. Although the dollar index remains strong in the short term due to the Fed's hawkish stance, in the medium to long term, the USD's share of global foreign reserves has fallen from 71% at the start of the century to about 58% today, with the downtrend continuing. The US's widening fiscal deficits, increasingly complex debt issues, and the 'weaponization' of geopolitics are eroding the dollar's credit foundation. Gold, as a 'mirror asset' to the dollar system, benefits continuously from this structural change.

Additionally, long-term challenges like aging, green transition, and geopolitical fragmentation across major economies boost safe-haven demand. Gold offers inflation hedging, risk resistance, and high liquidity, making its role as an ultimate safe-haven asset increasingly prominent in times of rising uncertainty.

3. Allocation Value: Strategic Window Amid Short-Term Volatility

In summary, the short-term correction of gold prices in 2026 is essentially a market disruption from macro expectation adjustments, not a fundamental reversal. For institutional and high-net-worth investors, the current $4000-4200/oz range may present a 'golden pit' for medium- to long-term allocation. Specific strategies include:

• Phased buying to smooth risk: Use market fluctuations to buy physical gold, gold ETFs, or related mining stocks periodically, reducing entry point risk.
• Monitor central bank actions: Track purchase pace of major economies; if China, India, etc., continue intensive buying, it strongly supports gold prices.
• Dynamic portfolio adjustment: Maintain 5%-15% precious metals in total portfolio, flexibly allocated based on risk appetite.

Conclusion

Short term, oil price shocks from the US-Iran conflict and policy swings from strong US employment data indeed pressure gold. Yet these factors are not sustainable – oil prices will eventually revert, and employment data has seasonal fluctuations. What truly determines precious metals' long-term direction is central banks' strategic gold purchases and the irreversible weakening of the USD credit system. In this sense, each short-term correction opens a window for long-term value deployment. Investors should look beyond immediate noise and seize the certainty within the era's major trends.