Ren Fei of China Europe Fund: Gold Faces Short-term Pressure but Maintains Long-term Optimistic Outlook

Golden Ten Data reported on March 24 that recently, due to external geopolitical developments, gold price volatility has intensified significantly. Ren Fei, fund manager at China Europe Fund, analyzed that the core drivers of gold prices can be divided into long-term and short-term factors: long-term factors depend on the US fiscal deficit ratio and, behind it, the size of government debt and creditworthiness, while short-term factors are mainly influenced by the degree of monetary policy easing. Regarding the recent decline in gold following the US-Israel-Iran conflict, Ren Fei believes that in the short term, the conflict has significantly pushed up international oil prices, causing previously easing inflation expectations to resurface, leading to recurring market concerns. At one point, the market even expected the Federal Reserve might resume rate hikes in 2026. This directly limited the room for monetary policy easing, thus impacting gold prices considerably. Despite short-term adjustments, Ren Fei remains optimistic about gold's long-term trends for two main reasons: First, the US-Israel-Iran conflict is highly likely to develop into a protracted stalemate, which may eventually return to negotiations, while the US government’s debt pressure will continue to accumulate throughout the process, and its monetary creditworthiness will remain under continuous strain. Second, regarding the choice between raising and lowering interest rates, the US is unlikely to shift back to rate hikes; to ease the pressure of government debt interest payments and support development in sectors such as AI, monetary policy will need to remain accommodative, and there may even be a need for rate cuts; therefore, the monetary environment is unlikely to tighten substantially.