Thanks to the easing of tensions in the Middle East, which had been driving up gold prices, the international gold market has shown considerable "restraint" and has not seen excessive gains. However, it is essential to recognize the difference between a temporary easing and a complete resolution; thus, while gold prices may "lose points" in the short term, it does not affect their medium to long-term upward trend.

Israel's Retaliation: "Late and Coarse"

On October 1, 2024, the Iranian Revolutionary Guard Corps fired over 180 ballistic missiles at Israel, targeting its military and security objectives. Israel indicated that it would retaliate within 48 hours. However, several "48-hour" periods have passed, and Israel has yet to...

The latest news indicates that after more than ten days of situational assessment, the Israeli high command has reached a comprehensive consensus on a "precise, lethal, and surprising" retaliation plan against Iran, but the specific operational plan still requires final approval from the cabinet.

The delay in Israel's retaliation against Iran is not due to a "change of heart" by Netanyahu's government, but rather the result of various "restraint factors."

US officials have confirmed that the US has sent a letter demanding that Israel take urgent measures to improve humanitarian aid in Gaza within 30 days, or else military aid may be restricted. This is the strongest warning issued by the Biden administration since the outbreak of war between Israel and Hamas.

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There is also a "real and inescapable" reason: the Israeli military has opened multiple fronts, and the consumption of ammunition has been astonishing.

A former senior US defense official responsible for Middle Eastern affairs revealed to the media: Israel's ammunition issue is very serious. If Iran responds to Israel's attack with a large-scale airstrike and Hezbollah joins in, Israel's air defense capabilities will be overwhelmed. Furthermore, the US inventory is not unlimited.

High Debt and Central Bank Gold PurchasesThe International Monetary Fund (IMF) stated in its latest Fiscal Monitor report that due to faster-than-expected growth, global public debt is likely to exceed 100 trillion US dollars for the first time by the end of this year, reaching 93% of the global Gross Domestic Product (GDP), and is expected to approach 100% of GDP by 2030, surpassing the peak of 99% during the previous pandemic period.

The IMF pointed out in the report that, in an extreme scenario, the global debt level may reach 115% of global GDP by 2026, nearly 20 percentage points higher than the baseline forecast, with the ratio of U.S. government debt to GDP potentially reaching as high as 150%.

The U.S. Congressional Budget Office reported that the U.S. federal government's budget deficit for the fiscal year 2024 is as high as 1.8 trillion US dollars, with the net interest expenditure on public debt increasing by 24 billion US dollars, or 34%, compared to the previous fiscal year, with the total expenditure amounting to 950 billion US dollars. The latest total U.S. federal debt stands at 35 trillion US dollars.

It is well-known that the significant driving force behind the continuous historical highs in international gold prices is the large-scale purchase of gold by global central banks. In the past, central banks would "quietly" buy gold; now, central banks are no longer "furtively" acquiring gold.

Officials from the Central Bank of Mexico, the Bank of Mongolia, and the Czech National Bank stated on the same day that, against the backdrop of heightened geopolitical tensions and declining interest rates, the proportion of gold in their respective central bank reserves may continue to increase in the coming years.

According to data from the World Gold Council, driven by portfolio protection strategies and diversification demands, global central banks' net gold purchases in the second quarter of this year increased by 6% year-on-year to 184 tons.

The momentum for short-term increases has somewhat slowed, but it does not hinder the strong potential for medium to long-term gains. It is expected that international gold prices will continue to rise slowly and keep setting new highs. In the short term, reaching the 2,700 US dollar mark is just a matter of time.