Zhongou Fund's Ren Fei: Short-term Pressure on Gold Does Not Change Long-term Optimistic Trend.

In recent days, due to the impact of peripheral geopolitical factors, the fluctuations in the price of gold have significantly intensified. Ren Fei, a fund manager from China Europe Fund, analyzed that the core driving factors of gold prices can be divided into two dimensions: long-term and short-term. Long-term factors depend on the U.S. fiscal deficit ratio and the government debt size and credit level reflected behind it, while short-term factors are mainly influenced by the degree of monetary policy easing. Regarding the recent drop in gold prices after the US-Iran conflict broke out, Ren Fei believes that in the short term, the conflict significantly pushed up international oil prices, causing inflation expectations, which had been trending downward, to rise again. Market concerns have appeared repeatedly, even speculating that the Federal Reserve may restart rate hikes in 2026, which directly constrains the space for monetary policy easing and thus significantly impacts the price of gold. Despite short-term adjustments, Ren Fei remains optimistic about the long-term trend of gold. There are two main reasons for his optimism: firstly, the US-Iran conflict is likely to evolve into a long-term tug-of-war, eventually returning to negotiation games. During this process, the debt pressure on the United States will further accumulate, and its currency credit will continue to be under pressure. Secondly, in the choice between raising and cutting interest rates, the United States is unlikely to switch to raising rates. To alleviate government debt interest payment pressure and support the development in fields such as AI, monetary policy still needs to remain loose, and there may even be a need for rate cuts. Therefore, the monetary environment is unlikely to substantially tighten.