On February 25, 2025, the international gold market displayed a complex wave of fluctuations during the early trading hoursAt opening, spot gold prices were set at $2,892.26 per ounceThis marked the continuation of a seven-week ascending trend; however, the dramatic correction that occurred the previous Friday still loomed large in the market's collective memory.

The sell-off on the previous Friday represented a pivotal moment for the market in the current weekSpot gold surprisingly plummeted 1.6% during trading that day, closing at $2,882.99 per ounce, the largest daily drop seen in nearly two weeksThis downturn was primarily driven by profit-taking as investors who had seen prices rise over 6% in the preceding weeks rushed to secure their gains, triggering a technical correctionSimilarly, the U.S. futures market could not escape unscathed, with the leading contracts falling by 1.5% and ending at $2,900.70. Nonetheless, it is noteworthy that despite this considerable drop on Friday, gold maintained a weekly increase of 0.8%, indicative of a strong medium to long-term investment stance.

Market analysts suggest that this correction does not alter gold’s long-term bullish trend

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The fundamental factors propelling gold prices upward remain intact: the U.S. government’s implementation of a reciprocal tariff policy continues to ripple through the economy, exacerbating existing global trade tensions; meanwhile, the Federal Reserve's persistent ease in monetary policies keeps the U.S. dollar under pressure.

The tariff policies enacted by the U.S. government have taken center stage in current market discussionsLast Thursday, an announcement from the White House Economic Advisory Committee called for reciprocal countermeasures against all countries imposing tariffs on the U.SThis policy triggered a ripple effect across global supply chains: the DAX Index in Germany dropped by 2.3%, shares of Japanese automotive exporters tumbled, and the Vietnam Textile Association convened an emergency meeting in responseThe Director-General of the World Trade Organization warned that such tit-for-tat tariff measures could shrink global trade volumes by up to 15% within the year and create systemic economic risksIn this context, gold’s traditional status as a safe-haven asset has gained renewed significance.

Additionally, the dismal performance of domestic economic data in the U.S. has also provided essential support for gold pricesThe most recent retail sales reports for January indicated an unexpected decline of 1.2% in core retail sales, marking the most significant drop since March 2023. This data sharply contrasts with the Fed's earlier optimistic expectations, shaking market confidence in a "soft landing" for the U.S. economyThe Atlanta Fed's GDPNow model has revised its first-quarter growth forecast from 2.8% to 1.9%, amplifying concerns about a possible recession

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Historical data shows that when U.S. retail figures exhibit consecutive negative growth over two months, gold prices have averaged an 8.7% increase in the subsequent three months.

Among precious metals, silver's performance has been particularly noteworthyDespite a slight 0.3% decline on Friday, spot silver still settled at $32.27 per ounce, marking its highest level since October 2024. A rebound in industrial demand alongside expanding applications in the renewable energy sector has provided a robust foundation for silverThe largest silver ETF globally, iShares Silver Trust, has seen its holdings increase by 15% over the last two weeks, indicating active positioning by institutional investorsIn contrast, platinum and palladium showed slightly weaker performances, declining by 1% and 1.1% respectively; however, weekly trends remain upward, reflecting the overall strength of the precious metals market.

Technical analysis indicates that gold is currently hovering near critical resistance levelsOn a daily basis, gold prices have established short-term support around $2,880 while the prior peak at $2,920 serves as significant resistanceThe market volatility index has surged to 18.7, signifying increased anxiety among investorsA recent report from UBS suggests that gold’s safety premium has risen from 5% in January to the current 8%, prompting advice to maintain a 10% allocation to gold in investment portfolios.

Looking ahead, multiple factors will continue to influence gold price dynamicsThe specifics of the tariff policy implementation are expected to be released in March, potentially triggering another round of market fluctuations

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The Federal Reserve is scheduled to hold a monetary policy meeting on March 18, where shifts in the dot plot will be closely monitoredAdditionally, escalating tensions in the Middle East introduce significant uncertaintyIn this complex environment, gold's "crisis hedge" function will increasingly become paramountAs a JPMorgan analyst aptly put it, "When black swans are flapping around the globe, gold is the only asset that can provide certainty."

It is noteworthy that structural changes within the gold market are quietly taking shapeThe demand from Asian markets continues to rise, with gold reserves at the Shanghai Gold Exchange increasing by 22 tons over the past six monthsSovereign wealth funds in the Middle East are also intensifying their allocations to gold, as evidenced by Saudi Arabia's Public Investment Fund raising its gold exposure from 3% to 5%. This trend of "gold flowing from the East to the West" is reshaping global gold pricing dynamicsFollowing the closure of the London gold market, trading volumes during Asian hours now account for 45% of the global total, enhancing the visibility of the 24-hour continuous movement of gold prices.

On a macroeconomic level, global debt has exceeded $300 trillion, equivalent to approximately 320% of global GDPThis phenomenon has created a liquidity trap in which the room for central bank monetary policy is shrinkingAs interest rates approach the zero lower bound, and the marginal utility of quantitative easing diminishes, the attributes of gold as a "super-sovereign currency" will become increasingly prominentHistorical evidence indicates that during times when the debt-to-GDP ratio surpasses 300%, gold has averaged annual gains of 12.3%, significantly outpacing the average of 6.5% for commodities.

For individual investors, strategies for gold allocation are also evolving

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