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On August 6, international spot gold returned to the $4,300/oz level intraday, hitting a new high since June 18, with domestic branded gold jewelry prices jumping more than 60 yuan/gram in a single day. On the same day as gold's strong rebound, the World Gold Council released its latest research report “Gold: The New Core Asset in a Multipolar Era,” upgrading gold's positioning from a traditional “safe-haven asset” to a “strategic allocation asset.” At a time of accelerating global multipolarization and normalized geopolitical risk, the question of “why buy gold” is being answered anew by the market.
Gold Returns to $4,300: The Result of Four Forces in Concert
Over the past two trading days, gold has been the most eye-catching asset among global macro assets. On August 5, London spot gold surged 4.16% in a single day to $4,247.17/oz, the largest daily gain in recent times; spot silver followed with a 4.26% gain. The sharp rally was the result of four forces acting in concert: macro expectations, geopolitical conditions, capital flows, and central bank allocation. U.S. July ADP employment rose by only 44,000, far below expectations, significantly easing market bets on Fed rate hikes. The dollar index and Treasury yields both weakened, lowering the opportunity cost of holding gold from a valuation perspective. Iran and Oman closed in on an agreement on commercial passage through the Strait of Hormuz, bringing a temporary easing of geopolitical tensions. Goldman Sachs monitoring showed Shanghai Futures Exchange gold open interest rose by about 19,000 lots in a single day, Chinese gold ETFs continued to see net inflows, and Huaan Gold ETF absorbed about 6 billion yuan over 16 consecutive trading days.
From “Safe Haven” to “Strategic Allocation”: A Historic Shift in Gold's Role
Beneath the surface of sharp gold price swings, the WGC's latest research offers a longer-term perspective. The report notes that the international political and economic landscape is undergoing profound change from unipolar dominance to multipolarity. Global supply chain restructuring, frequent geopolitical conflicts, and the normalization of trade sanctions are gradually eroding the anchor of international rules. The global monetary system is also slowly moving away from the dollar-dominated traditional order, with record U.S. debt levels and persistent policy uncertainty undermining market expectations of dollar system stability.
In this context, as an asset not issued by any country, free of sovereign credit risk, and highly liquid, gold is undergoing a transition from a traditional “safe-haven asset” to a “strategic allocation,” gradually becoming the “new core asset” of the multipolar era. Behind this identity shift lies the simultaneous strengthening of five underlying logics on “why buy gold.”
Logic 1: In times of frequent geopolitical risk, gold is a strategic core holding
Since the Russia-Ukraine conflict in 2022, the world has entered the third period of elevated geopolitical risk since the end of the Cold War, with the situation deteriorating further since 2026. Historical data show that geopolitical risk is highly clustered; once a high-risk phase begins, it often fails to revert to its long-term average in the short term. WGC statistics show that in major geopolitical crises—including 9/11, Iraq's invasion of Kuwait, and the March 2026 U.S.-Israel-Iran conflict—gold generally posted positive returns in months when risk indices spiked, while risk assets such as stocks came under significant pressure. Gold's safe-haven attribute has not changed; it remains the most trusted hedging tool when market stress rises.
Logic 2: Central bank buying, a “slow variable,” continues to underpin the market
Global central banks have been the most important buyers in the gold market for years. In 2025, central banks purchased 848 tonnes of gold net, remaining above the 10-year average of 681 tonnes for five consecutive years. Even during the deep price correction in the first half of 2026, central banks bought 345 tonnes, still above the 10-year average of 317 tonnes. A WGC survey shows that 89% of central banks expect global official gold reserves to increase over the next 12 months, and 45% plan to add to their own reserves—a record proportion.
The People's Bank of China has been particularly active. As of the end of Q2, it had increased its gold reserves for 20 consecutive months, raising official reserves to 2,346 tonnes, about 8% of total foreign exchange reserves. In Q2 alone, it added 33 tonnes, the largest quarterly increase since Q4 2023. The central bank's asymmetric buying behavior—buying more as prices fell—reflects the urgent need for reserve diversification and risk dispersion, and also suggests that the attractiveness of gold allocation is rising at this stage, providing long-term bottom support for gold prices.
Logic 3: Long-term rate declines lower the opportunity cost of holding gold
For ordinary investors, the biggest “cost” of holding gold is the interest income foregone. China's economy is in a phase of growth momentum transition, household risk appetite is cautious, and to underpin economic growth, accommodative monetary policy will not turn around in the short term; domestic interest rates may remain on a long-term downward path. The lower interest rates are, the lower the opportunity cost of holding gold, and the more attractive gold allocation becomes—this is the fundamental “slow variable” supporting gold buying demand.
Logic 4: Long-cycle returns beat stocks and bonds
In terms of long-term returns, gold is no worse than mainstream risk assets. Data show that over the past 20 years, the compound annual return of yuan-denominated gold prices reached 9%, outperforming domestic stocks and bonds. From the collapse of the Bretton Woods system in 1971 to June 2026, the annualized return of dollar gold prices was 8.8%, also exceeding global stocks and bonds over the same period. For investors seeking wealth preservation and growth, gold is a “ballast stone” that can cross multiple economic cycles and maintain real purchasing power in inflationary environments.
Logic 5: Low correlation, a “shock absorber” for portfolios
Gold has low correlation with traditional assets such as stocks, bonds, and foreign exchange, and often plays a hedging role during sharp market fluctuations. Historical backtesting shows that during periods when a portfolio consisting of 50% CSI 300 and 50% China bonds experienced drawdowns, yuan-denominated gold mostly delivered positive returns. Recently, A-shares have undergone deep corrections, prompting some funds to seek low-correlation assets again, making gold an important tool for portfolio diversification. For high-net-worth individuals, gold's time-tested store-of-value function, global liquidity, and broad recognition also make it a vehicle for cross-border wealth preservation and intergenerational inheritance.
Is It Time to Buy Gold? Institutional Views and Asia-Pacific Allocation Ideas
While the “why buy gold” logic strengthens, institutions remain broadly optimistic about gold's outlook. CITIC Securities believes that three factors—accelerating U.S. fiscal deficit expansion, hard-to-heal geopolitical rifts under deglobalization, and continued central bank buying support—remain unchanged, and that the current decline is only a phase correction in a bull market, with around $4,000/oz likely being the bottom area. Deutsche Bank expects gold to reach $4,700/oz by year-end, while UBS forecasts $4,400 in September and $4,600 in December. The WGC is more cautious, saying that if no major changes occur, gold will likely trade in a range of roughly 5% around $4,100 for the rest of 2026.
Analysts caution that central bank buying mainly provides “price bottom support” rather than driving a one-way rally; a new trend will still require sustained ETF inflows and institutional investor returns. For ordinary Asia-Pacific investors, the following allocation ideas may serve as reference:
- Control the proportion: Hold gold as part of long-term asset allocation, ideally between 5% and 15% of total assets, avoiding over-concentration;
- Build positions in stages: Adopt a strategy of buying in batches on pullbacks, avoid chasing short-term sentiment, and accumulate positions amid volatility;
- Choose the right vehicle: Flexibly select among physical gold bars, gold ETFs, or bank gold accumulation plans based on liquidity needs and holding period;
Gold's shift from a “hedging tool” to a “strategic core holding” is essentially a reflection of global order restructuring in asset pricing. As the unipolar system loosens, the anchor of monetary credit drifts, and geopolitical risk becomes normalized, the answer to “why buy gold” is no longer confined to short-term hedging, but points to a longer-term, more structural allocation question. For ordinary investors, understanding this shift in underlying logic may be more meaningful than fixating on a specific price level.
