PRECIOUS METALS | Huaxi Securities Highlights Significant Gold Volatility

Gold volatility has significantly increased, according to Huaxi Securities. The implied volatility of gold has risen continuously since last Thursday, reaching 35, which is at the 99.4% historical high percentile since 2009. According to Jin10, this surge is attributed to gold entering a rapid decline phase, awaiting a decrease in volatility. In the broader context, the long-term support for gold remains intact. On one hand, the accelerated evolution of geopolitical dynamics is marginally weakening the credibility of the U.S. dollar, while the underlying logic of global central banks moving away from dollar dependency remains unchanged. On the other hand, the continuous rise in U.S. debt levels indicates a high reliance on loose monetary policy, suggesting no foundational basis for a trend reversal in gold. The recent sharp correction in gold prices is largely seen as a deep adjustment following previous excessive gains, with expectations that the subsequent bottoming and recovery process will require a considerable amount of time. A new round of gold market activity may commence once expectations for Federal Reserve interest rate cuts are reignited.