Hong Kong gold prices hit a new historical high: Can the 50-year bull run continue?

The Evolution and Price Trajectory of Gold Trading

Since ancient times, gold has been humanity’s most trusted store of wealth. Thanks to its high density, excellent ductility, and corrosion resistance, gold not only serves as an important medium of exchange but is also widely used in jewelry, industrial applications, and more.

Over the past 50 years, despite frequent fluctuations in gold prices, the overall trend has remained upward. Especially as we enter 2025, gold prices continue to hit new record highs, with major markets like Hong Kong gold prices also reaching new peaks. What underlying logic has driven this half-century-long rally? Will it continue into the next 50 years?

Astonishing 50-Year Price Increase: From $35 to $4,300

August 15, 1971, is a pivotal date. U.S. President Nixon announced the detachment of the dollar from gold, officially ending the Bretton Woods system. This decision profoundly changed the destiny of gold.

Before the detachment, gold was fixed at $35 per ounce. Since then, gold prices embarked on a magnificent journey spanning over 50 years. From $35 in 1971, reaching $3,700 in the first half of 2025, and breaking the historical high of $4,300 per ounce in Hong Kong gold prices in October, the cumulative increase exceeds 120 times.

In 2024 alone, gold rose over 104%. Since the beginning of 2025, despite escalating tensions in the Middle East and renewed Russia-Ukraine conflicts, gold has continued to demonstrate strong upward momentum under the combined effects of central bank accumulation, a weakening dollar, and rising geopolitical risks.

In-Depth Analysis of Four Key Bullish Cycles

First Wave: Confidence Crisis in the Early 1970s (1970-1975)

After the dollar’s detachment from gold, the international market erupted with concerns over paper currency credibility. People worried that the former “gold exchange certificates” had become worthless, prompting a rush into gold as a safe haven. Gold prices soared from $35 to $183 within five years, an increase of over 400%.

The subsequent oil crisis intensified this trend. The U.S. significantly increased money supply to purchase energy, further pushing up gold prices. However, once the crisis subsided, the market gradually realized the continued convenience of the dollar, and gold prices retreated to around $100.

Second Wave: Geopolitical Turmoil in the Late 1970s (1976-1980)

Events such as the second Middle East oil crisis, the Iran hostage crisis, and the Soviet invasion of Afghanistan followed one after another, plunging the global economy into recession with soaring inflation. Gold skyrocketed from $104 to $850 per ounce, an increase of over 700%.

This rally was pushed to its peak. As geopolitical tensions stabilized and the Soviet Union eventually disintegrated, gold prices entered a consolidation phase, mostly fluctuating between $200 and $300 over the next 20 years.

Third Wave: Long-term Hedge in the New Millennium (2001-2011)

The 9/11 attacks triggered global security concerns, leading the U.S. to launch a decade-long global anti-terrorism war. To fund these large military expenditures, the U.S. government implemented multiple rounds of rate cuts and debt issuance, fueling a housing bubble.

Repetitive interest rate policies led to the 2008 financial crisis. Facing market collapse, central banks re-implemented large-scale quantitative easing. Gold then entered a decade-long bull market, reaching a peak of $1,921 per ounce during the European debt crisis in 2011. After EU intervention, gold prices stabilized around $1,000.

Fourth Wave: Contemporary Multi-faceted Hedging Demand (2015-present)

The past decade has witnessed a new cycle of gold price increases. Japan and Europe implemented negative interest rate policies successively, and the global de-dollarization trend strengthened. In 2020, the U.S. launched another round of aggressive QE, while geopolitical risks like the Russia-Ukraine war and Israeli-Palestinian conflicts surged, supporting gold prices above $2,000.

By 2024-2025, the record high in Hong Kong gold prices is unprecedented. Risks from U.S. economic policies, central bank gold reserve accumulation, escalating Middle East tensions, and uncertainties from U.S. trade policies have driven gold prices to new heights.

Genuine Evaluation of Gold Investment Value

To determine whether gold is worth investing in, a comparative analysis of horizontal and vertical perspectives is necessary.

Vertical Comparison: 50 Years vs. 30 Years

• Over the past 50 years (1971-2025), gold increased 120 times
• During the same period, the Dow Jones Index rose from 900 to 46,000 points, about 51 times
• However, in the last 30 years, stock returns have actually surpassed gold

This indicates that long-term performance of gold is not inferior to stocks, but the relative performance varies greatly across different periods.

Investment Characteristics of Gold

• Return Source: Pure price difference, no interest income
• Suitable for: Clear bullish or bearish market phases
• Not suitable for: Long-term passive holding (e.g., the 20-year consolidation from 1980-2000, where investors gained no returns)

Important Rule: When gold prices decline, the lows are gradually rising

This means that even if a bullish trend ends with a correction, the support levels for gold are moving upward. Therefore, investors need not be overly pessimistic about gold; as long as they understand that the lows keep rising, they can avoid unnecessary losses.

Five Major Ways to Invest in Gold: Comparison

1. Physical Gold

Direct purchase of gold bars or ingots. Advantages include strong asset privacy and the ability to wear jewelry; disadvantages are less trading convenience and time costs for liquidation.

2. Gold Certificates

Similar to gold custody receipts, recording ownership shares. Can be exchanged for physical gold at any time or stored physically. Advantages include portability; disadvantages are large bid-ask spreads and no interest income, suitable only for ultra-long-term holders.

3. Gold ETFs

A more liquid investment instrument than certificates. Buying ETF shares grants exposure to a certain amount of gold. Be aware of management fees charged by the issuing company, which can erode long-term returns.

4. Gold Futures and Contracts for Difference (CFD)

Preferred tools for swing traders. Offer leverage and two-way trading convenience, with relatively low transaction costs. CFDs are more flexible than futures, with higher capital efficiency, especially suitable for retail investors with limited funds for short-term trading.

Advantages of trading gold with CFDs:

• Support for long and short positions
• Flexible leverage
• T+0 trading mechanism, enter and exit at any time
• Low minimum deposit, starting with 0.01 lot

5. Gold Funds

Managed by professional fund managers, holding gold-related assets. Suitable for investors optimistic about gold but lacking time for active trading.

Comparing Investment Logic of Gold, Stocks, and Bonds

The sources of returns for these three asset classes are entirely different:

Golden Rules for Economic Environment and Asset Allocation:

During economic expansion, corporate profits are optimistic, and stocks tend to rise, while gold and bonds are relatively less favored.

During recessions, corporate profits decline, and gold’s hedging function along with bonds’ fixed interest become safe havens for capital.

The most prudent allocation strategy: Based on individual risk tolerance and investment horizon, allocate a balanced mix of stocks, bonds, and gold. This diversification can offset some volatility even amid sudden geopolitical events (Russia-Ukraine conflict, inflation hikes, etc.).

The Deep Logic Behind the Historical High of Hong Kong Gold Price

This gold rally is not accidental but the result of multiple factors resonating:

• Central bank accumulation strategies: Central banks worldwide actively increase gold reserves, becoming major buyers
• Dollar depreciation trend: The dollar index weakens, making gold priced in USD relatively cheaper
• Escalating geopolitical tensions: Ongoing conflicts in the Middle East and Russia-Ukraine increase safe-haven demand
• Trade uncertainties: Major adjustments in trade policies worldwide lead markets to seek safe assets

These factors jointly drive the appearance of the historical high in Hong Kong gold prices and lay a foundation for future trends.

Conclusion: Will the Next 50 Years Reproduce a Bull Market?

It’s difficult to give an absolute answer. But one thing is certain: gold’s status as the ultimate safe-haven asset will not change. As long as global economic cycles, geopolitical risks, and monetary policy shifts exist, gold will retain its value.

For investors, the key is not whether gold can sustain a 50-year bull run, but whether they can seize each clear trend. Allocating stocks during economic growth, shifting to gold during recessions, and engaging in swing trading at appropriate times are the right ways to profit from gold investments.

The current record high in Hong Kong gold prices reflects genuine market risk perception and offers opportunities for proactive investors.