Core Viewpoint - The article discusses the recent surge and subsequent decline in gold prices, suggesting that while gold has not yet reached its peak, it has moved past the explosive growth phase and should now be viewed more as a wealth protection tool rather than a high-return investment vehicle [6][29]. Market Dynamics - Gold prices skyrocketed from $3000 to $4000 per ounce within seven months, reaching a peak of $4398 on October 20, followed by a significant drop of 5.07% the next day, marking the largest single-day decline since its listing [2][6]. - Market sentiment has turned bearish, with approximately 52,000 put options accumulated in the $4000-$3900 range, indicating increased pessimism about gold's future performance [5]. Historical Context - The article highlights that gold prices tend to rise during periods of energy market turmoil or when energy costs are reassessed, as seen in historical instances from 1971-1980 and 2001-2011, where significant geopolitical events led to substantial increases in gold prices [10][13][16]. Central Bank Behavior - Central banks have shifted from being ordinary participants in the gold market to key players influencing pricing, with global central bank purchases exceeding 1000 tons annually since 2022, indicating a structural change in gold's market dynamics [25][28]. - The trend of central banks increasing gold reserves is expected to continue, although the pace may become more flexible due to high gold prices [28]. Geopolitical Factors - Ongoing geopolitical tensions, such as the Russia-Ukraine conflict, have heightened demand for gold as a safe-haven asset, reinforcing its appeal during times of uncertainty [25][26]. - The article notes that as geopolitical conflicts become the new norm, countries are increasing defense spending and stockpiling resources, which may lead to further monetary expansion and lower real interest rates, benefiting gold [23][24]. Investment Strategy - The article advises investors to view gold as a hedging tool against stock market risks rather than a high-yield investment, especially in light of the current market conditions where risk assets may offer better returns [29][31]. - It suggests that the best approach for investors is to adopt a "buy low" strategy and avoid chasing high prices, emphasizing that gold should be seen as a wealth preservation tool in volatile markets [31][32].