On October 26, Caijing News (Editor Zhou Ziyi) noted that Mohamed El-Erian, a renowned economist and Chief Economist at Allianz, stated that the current gold price is hitting record highs, reflecting global financial institutions' intention to reduce investment in the US dollar and achieve asset diversification.

Gold prices have risen by 32% so far this year, exceeding the 23% increase in the s&p 500 index. Gold prices climbed to a record high near $2758.49 this week. Key macro risks in the coming weeks will come from various sources, from the ongoing turmoil in the Middle East to the US elections, which investors should closely monitor.

El-Erian said on Friday, "When we try to link this year's gold trends with traditional financial and economic variables such as interest rates and the US dollar, we find that this relationship has broken down."

El-Erian discusses the factors behind the rise in gold prices, attributing this long-term trend to two fundamental driving factors. One is the slow diversification of reserves beyond the US dollar by global central banks, and the other is the gradual move of payment systems towards diversification beyond the US dollar.

The former is reflected in the continued gold purchases by foreign central banks, driving the strength of gold. As for the latter, it mainly reflects Russia's ability to maintain trade relations and development, even though its major banks are excluded from the global financial messaging service Swift.

Recent Swift data shows that the US dollar's share in international payments has remained relatively stable in recent years, slightly below 50%, although still well above other currencies. However, transactions involving the Renminbi have increased in recent months.

El-Erian stated that although the process is slow, this diversification trend is gaining momentum, and recent events have accelerated the shift towards gold.

Furthermore, Adrian believes that the escalating situation in the Middle East has also driven the trend of gold, and added that most countries believe the USA has double standards in human rights and international law.

In the early hours of Saturday, October 26, Israel launched a military strike against Iran in retaliation for Iran's large-scale ballistic missile attack on October 1. Although the US stated that it was not involved in the Israeli military action against Iran, Israel had previously reached an informal agreement with the USA that as long as Israel did not attack Iran's nuclear facilities and oil installations, the US would provide "compensation".

Editor/Lambor