Gold Market Review and Key Insights: Last week, London spot gold closed at $4,492 per ounce (down 10.5% week-on-week), while domestic AU9999 gold finished at ¥1,042 per gram (down 8.3% week-on-week).

The recent sharp correction in gold is a typical liquidity shock and panic-induced sell-off, rather than a rejection of gold's fundamentals. The transmission mechanism is as follows: a broad decline in global assets → investors face margin call pressures → selling the most liquid profitable assets (gold) to raise cash → falling gold prices trigger more stop-loss and quantitative selling → forming a negative feedback loop → short-term pressure on gold.

However, historical experience shows that liquidity shocks often feature rapid onset and resolution, with potential for a rebound after oversold conditions. From its peak near $5,600, gold has experienced a maximum drawdown of 22% year-to-date in 2026. For context, the maximum drawdown during the Russia-Ukraine conflict in 2022 was 21%, and during the 2008 financial crisis it reached 30%. Thus, from a decline perspective, the emotional shock to gold has reached extreme levels.

Last week, market expectations for Federal Reserve rate hikes gradually intensified. However, we believe conditions for rate hikes are not currently present; the rate-cutting cycle has been delayed but not reversed.

First, US interest rates remain at significantly restrictive levels. The current federal funds rate of 3.5%-3.75% is well above the Fed's estimated neutral rate of 3.1%, starkly contrasting with the low-rate environment of 2022. Even if oil prices push short-term inflation higher, real interest rates remain elevated, continuously suppressing economic activity. Oil price increases may not translate into broader price pressures. Against a backdrop of already slowing economic growth, the costs of maintaining high rates are accumulating.

Second, labor market weakness serves as the "trigger" for rate cuts. February's negative non-farm payroll growth sounded an alarm, with unemployment rising to 4.4%. Labor market softness is an objective reality. If employment data continues to weaken, the Fed will be forced to reassess its policy stance.

Third, debt pressure necessitates rate cuts. US federal interest payments now exceed military spending, with the high-rate environment eroding fiscal sustainability. Regardless of who chairs the Fed, debt pressure represents an unavoidable practical constraint. Particularly under a new Fed chair, abrupt rate hikes would face significant political and economic resistance.

Looking ahead, liquidity shocks and panic selling typically represent short-term disturbances. As panic subsides and markets reassess macroeconomic risks, gold may see a potential oversold rebound. Furthermore, current market expectations for rate cuts have nearly vanished, with hawkish Fed expectations already priced in extensively. Any future signs of US economic slowdown could trigger a recalibration of these expectations.

Over the medium to long term, the macroeconomic factors supporting gold remain intact, including: sustained gold purchasing demand from global central banks amid de-dollarization trends, erosion pressure on the US dollar's long-term credibility due to US "fiscal dominance" policies, and systemic risks arising from fragmented global geopolitical structures. Gold's value in hedging against "fragmented international order risks" and "sovereign currency risks" continues to be evident.

Key signals for gold investors to monitor in the coming week: (1) Developments in Middle East tensions; (2) Statements from Federal Reserve officials.

Related Products: - HuaAn Gold ETF (518880)/Link A (000216)/Link C (000217) - HuaAn Gold Equity ETF (159321) - Comparison of RMB-denominated gold versus international gold price trends:

Data source: Wind, HuaAn Fund, as of March 22, 2026.

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A MACD golden cross signal has formed, with several stocks showing favorable momentum.