Core Insights - Gold is traditionally viewed as a store of wealth and has seen significant price increases over the past year, driven by geopolitical and economic concerns [1][2] - Bitcoin, while also considered a store of wealth, is a digital asset with value determined by market perception, and it lacks the physical presence of gold [3][4] - The historical stability and established role of gold as a diversification tool contrasts with Bitcoin's relatively new status and untested nature as a store of wealth [4][5] Investment Considerations - Gold remains a physical asset that can be used in various scenarios, providing a sense of security for investors [2] - Bitcoin's volatility and lack of physicality raise questions about its reliability as a long-term store of wealth, especially in economic downturns [3][4] - Only aggressive investors should consider allocating significant portions of their portfolios to Bitcoin or gold, as both assets can be subject to speculative price movements [5]

Core Insights - The strong performance of gold is primarily driven by rising investment demand, particularly from institutional buying and gold-backed ETFs, alongside individual purchases of gold bars and coins [1][5] - Central banks continue to support gold demand, accounting for approximately 20% of global demand, although their purchasing rate has slowed compared to record levels in 2022 [2][13] - Jewelry demand has declined in volume due to higher prices, confirming that investment demand is the main driver of the gold market [3] Investment Demand - Investment demand for gold in the Middle East grew by 4% in the first half of 2025, while jewelry demand declined due to elevated gold prices [6] - Gold-backed ETFs experienced a 6.1% increase in total assets during Q3 2025, equivalent to around 222 tons, with a total increase of 20% since the beginning of the year [5] Geopolitical and Economic Factors - Rising geopolitical and economic turbulence, including regional tensions and inflationary pressures, are influencing gold prices, enhancing its appeal as a safe haven [6][7] - The correlation between the Global Geopolitical Risk Index and gold prices indicates that a 100-basis-point rise in the index typically corresponds to a 2.5% increase in gold prices [9] Market Dynamics - Recent sharp increases in gold prices are largely attributed to tactical activities from hedge funds and speculative investors, which may lead to short-term price corrections [10] - The valuation of gold serves as a diversification tool and store of value, showing an inverse relationship with stock markets during downturns [11] Central Bank Trends - Central banks are expected to remain active players in the gold market, with a survey indicating expectations for global gold reserves to continue increasing [13] - The World Gold Council has adjusted its forecast for central bank demand downward due to soaring prices but raised expectations for investment demand [14] Future Outlook - The future direction of US interest rates is crucial for investors, with the Federal Reserve's fiscal policy expected to shape the global trajectory of gold prices [15]