Over $2000!
As a traditional safe haven asset, gold prices have been bullish all the way recently. Following the sharp rise of 4.30% last week, the highest price of spot gold London gold on March 7 once hit US $200106/ounce. This is another breakthrough of US $2000 after August 2020.
As of 16:33 Beijing time on March 7, Comex gold futures once again stood at the US $2000 / ounce mark, up more than 1%. London gold is now quoted at 1995 yuan / ounce, up more than 1.5%.
Affected by the rising gold price, gold related ETFs outside China generally rose. As of March 7, the gold ETF fund (159937) rose 2.16%, with a half day turnover of nearly 100 million. As of March 5, the gold position of the world’s largest gold etf-spdr gold trust was 105428 tons, an increase of 4.06 tons over the previous trading day.
The picture shows the increase of China National Gold Group Gold Jewellery Co.Ltd(600916) etf as of March 7
Under the rising market of gold, the market bullish sentiment is high. However, whether gold can stand firm at $2000 and whether the future buying market can continue?
buy! High market sentiment
Under the influence of the sentiment of “buying up but not buying down”, the bullish sentiment in the recent market has further pushed up the price of gold. On Friday, 14 Wall Street analysts participated in the survey on gold by kitco, the world precious metals information service. They all said that the price of gold would continue to rise in the near future.
Data from the U.S. Commodity Futures Trading Commission (CFTC) also showed that as of the week from February 23 to March 1, the net speculative bulls in gold held by speculators increased by 14474 contracts to 257622 contracts, a new high in the last 19 months, indicating that investors’ willingness to be bullish on gold continued to rise.
On the consumer side, as the “king of risk aversion”, the price of gold has also risen all the way recently. “Recently, there are at least twice as many people buying and consulting as during the Chinese New Year.” Bank Of China Limited(601988) the account manager of a branch in Shenzhen told reporters that the main buyers are not only “Chinese aunt”, but also young people love to buy gold.
“Prices rise almost every week.” Ms. Huang, a Shenzhen citizen who has just started two gold bars, said that she bought gold to increase her sense of security and avoid asset devaluation. On March 7, the price of gold rose to 408 yuan / g, setting a new high in 2022, compared with 390 yuan / g last month, an increase of nearly 5%.
how far is 2000 dollars
Can the rising price of gold continue in the future? Many market participants said that gold prices will be well supported this year.
Recently, the volatile situation in Ukraine has made the monetary and financial attributes of gold more apparent. Zhu Zhigang, vice president and chief gold analyst of Guangdong gold association, said that the evolution of the situation in Ukraine will further highlight the hedging function of gold. Gold is one of the five major means of international settlement. When a country’s economy is in turmoil, its liquidity can be quickly converted into foreign exchange to maintain macroeconomic stability.
Zhang Tianfeng, chief analyst of Dongxing metal, also said that the geopolitical crisis superimposed the anti inflation attribute, which made gold show the characteristics of structural strength. He said that the current rise in commodity prices is likely to further exacerbate inflation and will have a spillover effect on gold.
He also said that according to historical data, the Fed’s tightening cycle will suppress the price of gold in the short term, but if the time cycle is extended to more than six months, gold will show structural strength.
With regard to the future trend of gold price, Zhu Zhigang predicted that if the situation in Russia and Ukraine is tense, the gold price will still rise all the way, reaching US $2000 / ounce. “Bullish sentiment is high, and the evolution of the situation in Ukraine will lead to exceptionally strong demand for hedging.” Zhang Tianfeng also believes that gold is still in the process of strengthening the structural bull market, and the operation focus of gold price may effectively stand at US $2000 / ounce during the year.
alert to the fall in the price of hedging assets
In the view of many institutions, although the duration of the conflict between Russia and Ukraine cannot be predicted, with the gradual clarity of the future situation, investors need to be vigilant against the decline of the price of safe haven assets.
Wells Fargo Fund said that reviewing the performance of major global assets during the geopolitical conflict since 2000, the asset price shock showed a “V” trend, and the duration and amplitude depended on the scale and degree of the conflict. At the beginning of the conflict, driven by risk aversion, gold, US dollar index, bonds and other risk averse assets rose; Driven by the expectation of tight supply, the prices of crude oil and other commodities rose; The fluctuation of equity assets, especially the growth style, has intensified. In the middle and later stage, as the situation gradually became clear, the price of safe haven assets fell, and the price of oversold assets stabilized and repaired.
\u3000\u3000 “We think that the fluctuation of commodity prices is mainly driven by events. The conflict has pushed up the demand expectation of commodities. At the same time, Russia is also an important supplier of energy and metals. The conflict may lead to the contraction of commodity supply and the rise of demand expectation, which will lead to the short-term rise of commodity prices. The sustainability of commodity price rise may still be mainly dependent on In the process of conflict, if the situation between Russia and Ukraine lasts for a long time, it may have a relatively lasting impact on commodity prices; If the conflict ends quickly, commodity prices are expected to return to normal. ” Xie Yi, Nord fund manager, said.
For the future trend of commodities, Xie Yi believes that at present, the situation in Russia and Ukraine and the possible recovery of China’s economy are good for commodities. Among them, the latter’s drive on commodity prices is more sustainable, because it will more substantially improve commodity demand. However, the Fed’s interest rate hike will suppress commodities, because commodities, especially metals, have certain monetary attributes, and the interest rate hike will put pressure on commodity prices. Therefore, for bulk commodities, both positive and negative factors will exist in the future.
The uncertainty of the Fed’s monetary policy will continue to suppress the price fluctuation of gold, which may also lead to the formation of a high risk of tips in the medium term.
China Europe Fund also believes that since the conflict between Russia and Ukraine, gold futures have walked out of an obvious upward trend. According to the changes of gold price before and after 10 geopolitical conflicts since the new century, it can be found that gold price generally rises before the conflict, but when the situation is clear, gold price does not necessarily rise.
“During the ten geopolitical conflicts since the beginning of the new century, the gold price rose and fell five times. The impact of the conflict on the gold price is more in the early stage. Generally speaking, the market has full expectations before the conflict, and after the conflict officially begins, the yellow gold price may fall under the background of all bad conditions.” China Europe Fund said.
