Geopolitics, De-dollarization, and Central Bank Gold Purchasing Behavior Impact on Traditional Gold Price

Abstract

Gold is a very special asset, which has both commodity attributes, currency and hedging functions. In the past, the price of gold was mainly determined by dollar credit, and its value system was formed by spot pricing in LBMA, London and futures price in COMEX, new york, especially relying on the single factors of American real interest rate and dollar exchange rate, showing the characteristics of “dollar-dominated and market speculation-driven”. However, in recent years, the normalization of global geopolitical conflicts, the acceleration of dollarization, and the continuous increase of gold holdings by central banks have combined to break the traditional gold pricing mechanism and make the original valuation logic less stable.