10. How does the current interest rate environment affect gold?

Let's put it this way, you can think of gold as a "chicken that doesn't lay eggs."

Under normal circumstances, if banks offer high interest rates, say 5%, then you deposit your money in the bank and earn 5% interest annually. This is like a "chicken that lays eggs." In such a scenario, you might be less willing to spend money on that "chicken that doesn't lay eggs" (gold), because holding gold itself doesn't bring you any interest income. With fewer people wanting to buy gold, its price tends to fall. This is called "opportunity cost"—you forgo the opportunity to earn interest by depositing money in the bank in order to hold gold.

Conversely, if bank interest rates are particularly low, say less than 1%, then your money won't generate much in the bank. At this point, gold, the "chicken that doesn't lay eggs," doesn't look so bad. People will feel that since saving money doesn't yield much interest anyway, they might as well convert it into gold for peace of mind. With more people wanting to buy gold, its price tends to rise.

So, the most basic rule is: Rising interest rates are bearish for gold; falling interest rates are bullish for gold.

However, the current situation is a bit complex.

Logically, with the Federal Reserve maintaining relatively high interest rates, this should be unfavorable for gold. But why are gold prices still strong, and even rising?

Because more than just interest rates influence gold prices. Several other forces are currently pushing gold prices up:

1. Safe-haven demand: Look at the current international landscape—isn't it quite chaotic? Wars here, economic problems there. Whenever there's turmoil, people feel that gold is the most reliable asset because, unlike paper money, it won't become worthless if a certain country falters. This sense of insecurity prompts many individuals and institutions to buy gold to "seek refuge," which drives up its price.

2. Anti-inflation demand: Although interest rates are high, inflation is also severe. If you deposit money in the bank and earn 5% interest, but prices rise by 4%, you've effectively only gained 1%. Gold is seen by many as "hard currency" that can resist inflation and preserve purchasing power. People worried about their money losing value will also buy gold.

3. Central banks worldwide are buying: This is a very important factor. Currently, it's not just ordinary people buying; many central banks (including China's central bank) are significantly increasing their gold reserves. The reasons behind this are complex, primarily aimed at reducing reliance on the U.S. dollar and achieving asset diversification. Central bank purchases involve large sums, providing very strong support for gold prices.

To summarize:

The current environment is like a tug-of-war. High interest rates are strenuously pulling gold prices down, but on the other end, geopolitical risks, inflation concerns, and large-scale purchases by central banks are three forces desperately pulling gold prices up.

Judging from gold's recent performance, it's clear that these latter three forces are temporarily gaining the upper hand.