Wang Lixin, CEO of the World Gold Council in China, said in an interview with the Shanghai Securities News that the Fed’s monetary policy adjustment is to raise interest rates and shrink the table respectively, and the signal is very clear. The Fed’s monetary policy adjustment will not have a direct impact on gold demand, but will have a certain impact on gold prices. The direct result of the interest rate increase policy is that the US dollar will strengthen in the short term, and the capital will return to the US market, causing short-term pressure on the price of gold.
Wang Lixin said that a major reason for the Fed’s policy changes is to curb high inflation, which is expected to continue for some time, which will support the price of gold. In other aspects, there has been no fundamental change in the demand for gold coin and bullion investment, central bank gold reserves and scientific and technological gold.
The demand for gold as a hedging tool will continue in 2022. Wang Lixin said that gold has unique investment function and value. On the one hand, gold investment has anti risk and safety. On the other hand, gold has strong liquidity and cash realization function, that is, it can realize rapid cash realization when the investor needs cash.
“In the long run, taking gold as an important part of asset allocation is conducive to reducing the risk of asset volatility. This is the idea we want to convey.” Wang Lixin said, “according to historical data and model calculation, under the same risk, the volatility of the asset portfolio allocated with gold will be reduced a lot.”
According to the latest data released by the World Gold Council, the global gold ETF position decreased by 173 tons in 2021. In China, the annual net inflow of gold ETF reached 14.4 tons, bringing the total position of China National Gold Group Gold Jewellery Co.Ltd(600916) ETF to a record high of 75.3 tons by the end of 2021.
In this regard, Wang Lixin said that the buyers of ETFs in China are mainly retail investors, while most of the western countries are institutional investors. They have different judgment on the timing of gold purchase. The global gold ETF fell 173 tons, only a little lower in terms of net value, which is a normal phenomenon. In China, with the policy adjustment, institutional investors are allowed to buy financial products of gold. In addition, Chinese consumers “bottomed out” gold when the gold price was low last year, and the increasing uncertainty in the stock market also promoted investors to increase the allocation of safe haven precious metals.
