Over the past two weeks, gold prices have come under renewed pressure due to factors such as rising US Treasury yields, hawkish comments from Federal Reserve Chairman Warsh, and stronger-than-expected US non-farm payroll data. After rising 15% in the first three weeks of August, gold prices have now fallen 5.5%. Meanwhile, a UBS market strategy report specifically analyzed the differentiated impacts of rising yields on stocks, bonds, and gold in this interest rate hike cycle. The market expects the Federal Reserve to raise interest rates by a total of 50 basis points this year. Rising real yields coupled with a stronger dollar may continue to weigh on gold's performance in the short term. However, the Fed's short-term policy decisions will not damage the medium-term outlook for global stock markets—which benefit from spending on artificial intelligence, economic resilience, and general corporate earnings growth; similarly, short-term rate hikes will not weaken gold's strategic position in investment portfolios. Gold remains a highly valuable asset for diversification, especially suitable for investors who prefer physical assets. Strong demand for gold from central banks will provide fundamental support for gold prices. The People's Bank of China purchased 650,000 ounces of gold (approximately 20 tons) in August, up from 640,000 ounces in July, marking the largest monthly increase since October 2023. This increase also extends the period of continuous gold purchases by the People's Bank of China to 22 months. And China is not alone in seeking to increase its gold reserves. A recent survey by the World Gold Council shows that nearly 90% of surveyed central banks expect global official gold reserves to continue to grow in the next 12 months, with 45% planning to increase their domestic gold holdings. Market expectations continue to suggest that global central banks' annual gold purchases will reach 750-1000 tons, providing significant structural support for gold. Fiscal concerns will further reinforce the long-term diversification logic of gold. In the short term, the Fed's high interest rates coupled with the resilience of the US economy will lead to a stronger dollar; however, in the longer term, continued market concerns about fiscal sustainability may limit further dollar appreciation. High levels of government debt will also drive a gradual reduction in the excessive concentration of dollar-denominated assets globally. Gold is widely recognized as a reliable store of value and an alternative to traditional reserve currencies; these trends will benefit gold. In the medium to long term, a weaker dollar will also boost demand for precious metals, supporting gold prices. Gold can buffer portfolios against the impact of inflation and geopolitical risks. Persistent inflationary pressures and geopolitical uncertainties solidify gold's position as a portfolio hedging and diversification tool. Institutional investors often value its performance during crises, its ability to hedge geopolitical risks, and its asset diversification value when allocating or increasing their gold holdings. Historically, gold has also demonstrated its anti-inflationary properties. Data from the *Global Investment Returns Yearbook* shows that since 1900, the real returns of gold and commodities have been positively correlated with inflation levels. In conclusion, the long-term investment logic for gold remains valid. Gold should primarily be viewed as a hedging and diversification tool for investment portfolios, rather than a tactical trading instrument for betting on short-term changes in Federal Reserve policy. Investors with insufficient gold allocations can take advantage of price corrections to gradually build a strategic position in gold within a well-diversified portfolio.