Recently, gold has ushered in the “golden age”, and the “crazy gold” is still playing out. After breaking through US$1,800 in early July, in just one month, the international gold price rose by about US$250, an increase of nearly 15% in particular, since the international gold price stood at the US$1,860 mark on July 23, it continued to set a new high for nearly nine years. Soaring all the way.
Loco London gold once rose to US$2055.71 in intraday trading yesterday, another record high price; London silver rose to US$27.135 yesterday, a new high since April 2013, and has soared by more than 50% so far this year. The dollar continued to weaken, U.S. bond yields fell further, and inflation expectations rose. Some investors worry that the economic stimulus measures introduced by the United States in response to the epidemic will trigger inflation and cause the devaluation of other assets.
On August 6, the December gold futures price on the New York Mercantile Exchange’s gold futures market, which was the most actively traded on the 5th, rose by US$28.3, or 1.4%, from the previous trading day, and closed at US$2049.3 per ounce, a record high. In addition, in the Asian market, both gold futures and spot stocks have set a record high, with an increase of about 10% over the same period. According to market analysis, in the short term, gold prices will continue to be the dominant players, but they will be dragged down by profit-taking sentiment from time to time, and there will be certain adjustments. It is expected that the medium-term gold price will be blocked by 2300.
Gold ETF investment boom
With the aid of factors such as the new crown pneumonia epidemic, low interest rates, global central bank stimulus measures, the sharp depreciation of the US dollar, and geopolitics, the price of gold has soared by more than 30% this year, becoming one of the best performing major assets in 2020. Since 2020, London spot gold has risen 33%, and COMEX futures gold has risen 35%.
Market analysis believes that there are three major factors that support the continued rise of gold prices First, the EU reached an agreement on the 750 billion euro recovery fund, and the second round of fiscal stimulus in the United States is about to be launched. Expected fiscal policies in Europe and the United States have led to higher inflation expectations and lower real interest rates. Affected by international tensions, market risk aversion has risen, risky assets have fallen, and funds flowed to safe-haven assets, bonds and gold third, weaker US economic data indicates that after the epidemic has worsened, the economy has repressed significantly, while the European epidemic control ratio The United States is strong, the US dollar index is weak, and gold is bullish.
Gold ETFs have become the main force in buying gold this year. According to statistics, as of this Monday (August 3), the global gold ETF holdings with physical support have increased by 30.5% this year to 3365.6 tons, which is several tons higher than Germany’s reserves and second only to the United States. In addition, the main force for buying gold is not only gold ETFs.However, although the popularity of gold as an investment product is rising, physical gold is a bit cold in real life. Due to the impact of the epidemic, the global demand for gold jewellery in the first half of the year nearly halved year-on-year to 572 tons. The impact of the epidemic in the second quarter was still severe. The consumption of gold jewellery fell to 251 tons in the quarter, a record low.
Short-term gold prices have the risk of large fluctuations in both directions
Due to the economic impact of the global epidemic, global stock markets have fluctuated sharply this year. In addition, the ever-increasing geographic tensions have also exacerbated the tension and enhanced the attractiveness of gold. In recent months, the price of silver has also seen a similar rise. The two precious metals, gold and silver, are among the best performing asset classes in the world this year. While gold and silver have soared, it also means that risks are gathering.
However, internationally renowned big banks are still bullish on gold prices and continue to raise their gold price targets. Previously, Citigroup and many other institutions expected the price of gold to reach US$2,000 per ounce within the year. Now the target point has been completed ahead of schedule. Goldman Sachs latest estimates that gold may climb to US$2,300 per ounce. Because investors are “looking for a new reserve currency,” RBC Capital Markets predicts that there is a 40% probability that the price of gold will rise to US$3,000 per ounce. In addition, analysts at the Bank of America Global Research Center predict that the price of gold will soar by 50% in the next 18 months, reaching about $3,000 per ounce, while other precious metals will also benefit from the new crown pneumonia epidemic.
Last week, on July 28, gold had a sharp dive of nearly $70 per ounce, and the price of silver also fell slightly. According to market analysts, this is mainly a technical adjustment triggered by bullish profits after the recent gold price has risen too fast, and it does not affect the continuation of the strong pattern of gold. In the medium term, the strong pattern of gold has not changed and the bull market has not yet finished. But in the short term, after the rapid rise of gold, this week will usher in the release of heavy non-agricultural data from the United States, and the price of gold is at risk of large fluctuations in both directions.