What is the signal that gold price has peaked?

1. What are the signals of gold price peaking? The historical systematic review of gold price peaks (defined here as a retracement of over 40%) using London gold as an example, since 1970, the gold price has peaked and retraced systematically three times: 1) In December 1974, the core event of the gold price peak was the signing of the US Dollar Oil Agreement, leading to a high level of US inflation by the end of 1974. Combined with the gradual economic recovery, the rise in real 10-year US Treasury yields led to a decrease in gold prices. Secondary factors included a slowdown in global geopolitical conflicts and central bank gold purchases. During this phase, US gold reserves decreased significantly, and at the same time, the US government's leverage ratio continued to decline, with the fiscal deficit not serving as a core indicator of the US dollar's credit. 2) In September 1980, the core event of the gold price peak was the Federal Reserve's implementation of a tightening monetary policy (core) and the peak in US inflation (secondary). At the time of this gold price peak, the Iran-Iraq war was still ongoing, with oil prices remaining high. Although oil prices fell following the end of the war and commodity inflation decreased, boosting real interest rates, the core factor behind the bottoming and rise in real interest rates in this cycle originated from the Federal Reserve's tightening monetary policy leading to a rapid rise in nominal 10-year US Treasury yields. 3) The core reason for the peak in gold prices in September 2012 was Obama's election campaign to reduce the deficit and his successful reelection, along with the rapid economic recovery in the US leading to a significant increase in fiscal revenue, strengthening the US dollar's credit. During this period, the Fed reduced the size of QE and the Eurozone debt crisis mitigated, temporarily suppressing gold prices. Based on historical experience, the core factors leading to a peak in gold prices are US fiscal deficit contraction (affecting medium to long-term gold price trends), with the secondary factor being the trend in 10-year US Treasury yields (affecting medium to short-term gold price trends), while short-term factors such as geopolitical pulse changes typically do not serve as signals of a peak (affecting short-term gold price trends). 2. Foreign companies are still withdrawing funds According to data from the State Administration of Foreign Exchange, direct investment in China's balance of payments decreased by $8.1 billion in the third quarter. It has decreased by nearly $13 billion in the first nine months of this year. In contrast, Chinese outbound investment has been growing significantly. Chinese enterprise overseas assets increased by approximately $34 billion in the third quarter. This year's outbound investment volume has reached $143 billion so far, the third-highest record for the same period. 3. Trade surplus approaching record trillion-dollar mark In the first 10 months of this year, China's trade surplus surged to $785 billion, setting a record high for the same period, a nearly 16% increase from 2023. According to institutions, this difference is expected to approach a trillion dollars for the whole year. The trade surplus in October reached the third-highest in history, slightly lower than the record set in June. In the first nine months of this year, the trade surplus calculated in renminbi accounted for 5.2% of nominal GDP, the highest level since 2015, far above the average level over the past ten years. 4. BofA: Reducing corporate tax to 15% will promote a 4% increase in S&P EPS Consumer discretionary earnings growth is the largest. 5. Is overseas demand for US Treasury bonds excessive? Over the past decade, foreign holdings of US Treasury bonds have increased by $2.6 trillion. Europe's holdings of US Treasury bonds increased by $1.5 trillion, while the rest of the world purchased $1.7 trillion in bonds. China and Japan's holdings decreased by $500 billion and $100 billion, respectively. Overall, the total amount of US federal debt held by foreign countries has decreased from 35% to 24%, close to the lowest level in 18 years. This is a result of public debt rising rapidly, with US debt supply increasing by about $15 trillion over the past decade. Foreign demand for US Treasury bonds has not kept up with the surge in US debt.