According to an APP report, Huaxi Securities' latest analysis points out that gold market volatility has increased significantly, and investors still need to strictly control their positions. Gold's implied volatility has been climbing continuously recently, currently reaching around 42, which is at an extremely high percentile level (over 99% since 2009). This reflects a sharp decline in gold prices, and the market is awaiting a decrease in volatility.

Huaxi Securities emphasizes that although the medium- to long-term logic for gold remains solid, the sharp short-term fluctuations have significantly increased risks. Looking at a longer timeframe, the core factors supporting gold remain unchanged: on the one hand, the rapidly evolving geopolitical landscape is weakening the marginal credibility of the US dollar, and the global central bank's "de-dollarization" process continues; on the other hand, the size of US Treasury bonds continues to rise, and the reliance on loose monetary policy remains high. Therefore, there is no basis for a trend reversal in gold prices. This round of sharp correction in gold prices is more of a deep correction after the previous overvaluation, and the subsequent bottoming and recovery is expected to take a considerable amount of time.

More importantly, gold is currently in a sharp decline. Huaxi Securities reminds investors that historically high volatility means price swings will further amplify, and any excessive exposure could face significant pullback pressure. The institution predicts that a new round of gold price increases may only begin when expectations of a Federal Reserve rate cut resurface, providing clear upward momentum to the market. Until then, the market will likely continue to consolidate and form a bottom, and it is not advisable to blindly chase the rally in the short term.

To clearly illustrate the latest volatility data and recent trends, the following is a comparison of key recent data on implied volatility for gold:

Huaxi Securities' analysis also considers the broader macroeconomic context: While geopolitical factors and central bank gold purchases provide long-term support, the Federal Reserve's recent decision to maintain interest rates and lower its forecast for the number of rate cuts in 2026 has put significant short-term pressure on gold prices. Given the persistently high volatility, the institution advises investors to prioritize strict position control and wait for volatility to fall back to a reasonable range before considering adding to their positions, in order to avoid unnecessary losses during the bottoming process.
Editor's Summary:
The sharp short-term pullback and extreme volatility in gold prices reflect the market's repricing of the Federal Reserve's policy path. However, in the medium to long term, de-dollarization and debt-related factors still provide a solid foundation for gold prices. Huaxi Securities' warning highlights the importance of risk management; investors need to patiently wait for clear signals of a Fed rate cut to capture the next round of trend-driven opportunities. This also reflects gold's unique role as a safe-haven asset in the current complex global environment.

Frequently Asked Questions

Q1: Why is it still necessary to strictly control positions even when the implied volatility of gold has soared to 42?
A: Huaxi Securities points out that the current GVZ index is at an extremely high level, above the 99th percentile since 2009, meaning the market expects gold prices to fluctuate sharply in the next 30 days. Although gold has entered a period of sharp decline, the high volatility itself amplifies the downside risk. Any overly heavy position may encounter a larger drawdown during the bottoming process, therefore, strict risk control is the primary principle.

Q2: Does this sharp correction in gold prices signify a trend reversal?
A: Huaxi Securities explicitly stated that this is not a trend reversal. This round of adjustment is more of a deep correction after the previous over-surge. The medium- and long-term supporting logic—the weakening of the US dollar's credibility, the global central bank's de-dollarization process, and the US Treasury's reliance on loose monetary policy due to its rising debt—has not fundamentally changed. Therefore, gold prices still have a long-term upward foundation; it's just that short-term recovery will take time.

Q3: What is the key role of the Fed's interest rate cut expectations in initiating gold price movements?
A: Huaxi Securities believes that a new round of gold price increases requires the renewed expectation of a Federal Reserve rate cut as a catalyst. The recent decision by the Fed to maintain interest rates and lower its forecast for the number of rate cuts in 2026 has put short-term pressure on gold prices. Only when the signal of a rate cut is clear will the opportunity cost of gold as a non-yielding asset significantly decrease, thereby driving funds to flow back in and ending the current bottoming phase.

Q4: How do geopolitical dynamics and global central bank behavior continue to support gold?
A: Huaxi Securities' analysis shows that the accelerating evolution of geopolitics has led to a weakening of the US dollar's credibility, while the underlying logic of central banks' continued allocation of gold remains unchanged. This provides solid medium- to long-term support for gold prices, and even with sharp short-term fluctuations, the long-term upward trend framework is unlikely to change.