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1. Report Industry Investment Rating No information provided. 2. Core Viewpoints of the Report - International events have accelerated the trend towards multi - polarization and increased the demand for reserve asset diversification and safe assets, with gold being the key recipient [3] - The long - term support for gold lies in two macro drivers: hedging against sovereign debt and currency credit risks, and serving as an ultimate currency and value storage tool [3] - The core factors driving up gold prices, such as hedging against debt monetization, responding to de - dollarization, and central banks' increased allocation, show no signs of reversal in the short term. Short - term liquidity shortages may cause a 15% - 25% technical correction in gold prices, but the long - term upward trend remains [3] 3. Summary by Relevant Catalogs Recent Market Review - In 2025, the cumulative increase in gold prices exceeded 60%, outperforming most global risk and fixed - income assets [5] Federal Fiscal Situation - In the 2025 fiscal year, the federal fiscal deficit was $1.8 trillion, a slight reduction of $800 million from 2024. The ratio of federal public debt to GDP is about to exceed 100%, mainly due to the imbalance between fiscal revenue and expenditure [18] - The US debt - reduction experience after World War II is difficult to replicate today as the key conditions, such as significant cuts in fiscal spending, strong post - war economic growth, and a long - term low - interest - rate environment, are absent [18] - The US fiscal expenditure structure is rigid, with mandatory expenditures accounting for over 85% of the total. Reducing social welfare or net interest expenditures is politically difficult and may damage the credit of the US dollar. In the 2025 fiscal year, the net interest expenditure on public debt exceeded $1 trillion for the first time [19][23] - US fiscal deficit expansion is a cross - party and cross - cycle norm. The actual deficit rate is likely to be higher than the CBO's forecast, as different presidents have promoted tax cuts and expenditure expansion policies over the past two decades [27] - In 2026, the average effective tariff rate in the US is expected to be lower than in 2025, which will lead to a decrease in tariff revenue and a greater impact on the fiscal balance [33] - If the Trump administration distributes tariff revenue as dividends, it will increase the deficit by $6 trillion in the next decade. The "Great Beauty Act" will increase the basic deficit by about $3.4 trillion in the next decade, and the additional deficit cannot be covered by tariff revenue [38] - If the IEEPA tariffs are completely abolished, the ratio of US federal public debt to GDP is expected to rise to 127% in the next decade, and may further increase to 138% - 143% if tariff dividends are distributed. This may lead to a sell - off of US Treasuries and an increase in the demand for gold [44] Central Bank Gold Purchases - Despite the nearly 60% increase in gold prices in 2025, official demand remained strong in the first three quarters, with a cumulative purchase of 634 tons. The gold purchase scale in the third quarter ranked among the top three in history [50] - In 2025, the proportion of gold in global central bank reserve assets (foreign exchange + gold) rose to 26%, while the US dollar share decreased from 43% to 39%, indicating a continuous trend of reserve asset diversification [54] - In 2025, global gold ETFs had a net inflow of over 700 tons, reversing the four - year net outflow trend and compensating for the decline in central bank gold purchases [61] Other Gold Demand Factors - The EU plans to use frozen Russian foreign exchange reserves to support Ukraine, which increases the risk of using sovereign currencies as reserve assets and further strengthens the safe - haven property of gold [67] - As of September 30, 2025, Tether's USDT held 104.2 tons of gold reserves, accounting for 7.1% of its total reserve assets. Tether's gold purchase is to enhance the stability of USDT's collateral and diversify its assets [71] Fed's Interest Rate Policy and Gold Prices - The slowdown in the US employment market, such as a decline in non - farm payrolls and an increase in the unemployment rate, provides a basis for the Fed to cut interest rates earlier and more significantly in 2026. Meanwhile, the potential inflation trend remains stable [77] - The expectation of interest rate cuts has led to an inflow of funds into the gold market, driving up the price of gold. Once the labor market shows signs of weakness, the Fed may cut interest rates, opening a new window for capital inflows into the gold market [83] Short - Term Disturbances to Gold Prices - "Liquidity risk" and "liquidity crisis" may be the key variables causing short - term declines in gold prices. However, the Fed's improved crisis - response ability means that the significant decline in the second stage of gold price fluctuations will be reduced [89]