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The international gold market has recently witnessed a notable rise, with prices recovering from a low point on November 14. Over the course of five trading days, the price of gold surged from $2,541 to an impressive $2,718, bringing it closer to the previous peak of $2,801 recorded on October 30.

This resurgence in gold prices is not only a reflection of international market activities but has also significantly impacted domestic gold brands in various countries, where jewelry gold prices have climbed back to 800 yuan per gram. This shift represents a broader trend in the gold market where consumer costs are inevitably influenced by changes in international gold pricing.

Interestingly, following a decline of over 9% from its highest point, many market analysts speculated that the bullish sentiment surrounding gold had reached its conclusion. However, recent developments have suggested otherwise, reigniting interest in gold investments. As this week unfolded, global gold prices made a remarkable comeback, rising nearly 6% and effectively reversing the losses incurred between November 9 and 15.

The fluctuations in gold prices can be closely linked to the rising geopolitical tensions across the globe. Such concerns naturally lead to a heightened sense of caution among investors, who often seek safe-haven assets like gold to protect their portfolios during uncertain times. As a result, the renewed surge in gold prices is, in part, driven by these short-term shifts in sentiment.

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Factors such as the strength of the US dollar and the easing expectations surrounding interest rate cuts by the Federal Reserve (Fed) generally create an unfavorable atmosphere for gold prices. Nevertheless, the underlying bullish momentum in the gold market tends to amplify any newfound optimism, allowing positive influences to overshadow negative conditions.

From a short-term perspective, as long as localized geopolitical tensions persist, there is potential for gold prices to further escalate quickly, possibly even testing historical highs once again. This is significant in markets where investor psychology is crucial; fear and uncertainty often lead to a rush for gold as an insurable asset.

However, the future of geopolitical tensions remains uncertain. If stability returns and the fears of conflict diminish, gold prices are likely to feel downward pressure once more. Such shifts can introduce considerable variability into global markets; for instance, potential decisions by the Federal Reserve regarding interest rates, the continuation of a strong US dollar, and possible easing of geopolitical strains will all play pivotal roles in shaping the direction of gold prices.

Currently, the gold market is still portrayed as being in a bullish state. A transition into a technical bear market will signify a pivotal moment for gold prices, marking when investors should adopt a more cautious stance.

Should gold prices drop from the previous peak of $2,801, a decline exceeding 20% would see values dip to around $2,241. This indicates that a fall below this critical level would usher the market into a bear phase, but, as it stands, the international market still maintains a significant buffer before approaching this threshold.

Since May of this year, central banks in various countries, particularly China, have suspended their accumulation of gold holdings. This trend has persisted for six consecutive months and suggests that current gold prices have surpassed levels that the central bank is willing to support. This strategic pause reflects a cautious approach toward gold investment, demonstrating that the central bank is grappling with the implications of high gold prices on its monetary policy.

China has engaged in four significant phases of gold reserve accumulation since the year 2000. These occurred from 2001 to 2002, again in 2009, followed by an extensive period from 2015 to 2018, and most recently from 2022 to 2024. The phase spanning November 2022 to April 2024 is particularly noteworthy, where the central bank increased gold reserves consistently for 18 months—a record frequency since 2000.

This decision by the central bank to halt gold purchases is particularly impactful. Given the complexities of the current market, factors influencing gold pricing are multifaceted, with dwindling supportive elements that could bolster prices further. In the short term, gold prices are likely to continue being swayed by the prevailing cautious sentiments, while long-term directions remain fundamentally linked to shifts in supply and demand dynamics.

While $2,801 might not represent the apex of this bullish trend, the reality is that increasing gold prices inevitably bring forth new risks, especially for those considering investing at higher levels. From a long-term investment perspective, gold remains a reliable hedge against inflation, maintaining its historical allure for investors. However, entering a bear phase could impose significant time costs for investors, as gold does not yield dividends or interest income during holding periods. These elements of risk are crucial focal points for potential investors to contemplate.