Although it returned to the $1800 mark at the end of the year, it is still difficult to hide the downturn of gold in 2021. This year, the international gold price has fallen by more than 4%, not only underperforming commodities, major stock indexes and other major assets, but also hitting the worst performance in six years. The precious metal silver with commodity properties has fallen by more than 13%. As one of the most familiar investment varieties for investors, under the expectation of economic recovery and tightening monetary policy of major economies, many institutions have again put a question mark on the investment prospect of gold, silver and precious metals in 2022.
gold and silver callback closed down
How long does it take from the best to the worst? Judging from the performance of gold, this cycle may be only one year.
In 2020, the international gold price soared by 25%, the best performance in 10 years, and once exceeded the integer mark of US $2000, reaching a record high. However, in 2021, the gold market staged a completely different story. Although the market liquidity is still abundant, the epidemic continues to repeat, the risk aversion is still in place, and inflation also rebounds significantly, the gold market shows more “one step and three turns back”, and the price continues to be depressed.
Data show that in the first half of the year, the international gold price staged a “V” shaped reversal. The gold price in New York market rose above US $1900 per ounce in the middle of the year, but the highs at the beginning of the year and the middle of the year basically became the highs and sub highs of the whole year. In the second half of the year, the market fell into the “Kraft sugar” market as a whole, and the gold market rebounded several times in a row. “The market direction is difficult to be clear, and it is difficult to rebound.” Gold investor Cheng Wei told reporters.
So far, the international gold price has continued to hover around us $1815 per ounce, down about 4.1% from the beginning of the year, which is expected to be the worst year in six years. Silver, another precious metal, fell even more. The price of silver in the international market basically returned to around $23 per ounce, while the price of silver futures in the Chinese market returned to around 4880 yuan per kilogram, down about 13% from the end of last year, the worst year in seven years.
“On the whole, gold, silver and precious metals have good fundamentals in 2021, including demand driven by economic recovery, abundant market liquidity and risk aversion. However, gold and silver are under pressure due to the following expectations brought by rising inflation and the continuous record high of other assets such as the stock market.” Cheng Wei said.
consumption and investment “two days”
Gold can not generate interest. Investing in gold can only obtain income through price changes. With the continuous downturn in prices, the investment in gold has cooled significantly.
According to the data of SPDR, the world’s largest gold ETF fund, so far, the gold held by the fund has decreased to 975.7 tons, a decrease of more than 200 tons compared with the holding at the beginning of the year, showing the trend of withdrawal of investment funds from the market.
However, for long-term investors, relatively low prices are still attractive. According to the data of the World Gold Council, the central bank continued to buy gold in the first three quarters of this year. In the third quarter, the global central bank bought 69 tons of gold, and the cumulative net purchase in the first three quarters was nearly 400 tons. Central banks including Brazil and India showed strong interest in buying gold.
For consumers, a relatively low price is undoubtedly a good time to start. “In the past, many consumers seemed to buy more and more up, but the younger generation bought more and more down.” Wang Yi, a gold bar consumer, told reporters that it is important to choose a relatively low price because he buys a certain gold bar every year, and 2021 is a more appropriate time as long as he buys it on major holidays in the second half of the year.
At the same time, jewelry consumption has also increased. Statistics show that the consumption of China and India, the main consumer places, continues to pick up. In India, due to relatively low prices, some institutions expect that India’s gold import in 2021 is expected to reach a new high in the past six years. In the Chinese market, the data of China National Gold Group Gold Jewellery Co.Ltd(600916) Association also shows that in the first three quarters, the consumption of gold jewelry was 529.06 tons, a year-on-year increase of 54.2%, Compared with the same period in 2019 before the epidemic, it increased by 1.1%.
According to the data of Shanghai gold exchange, the ex warehouse volume of gold reached 1552.3 tons in the first November, an increase of 49% over the same period last year. According to the analysis of the 2021 China National Gold Group Gold Jewellery Co.Ltd(600916) jewelry consumption survey white paper, China National Gold Group Gold Jewellery Co.Ltd(600916) jewelry consumption is mainly developing in the direction of youth. At present, the main consumers of gold stores are concentrated between the ages of 25 and 50, of which the consumption proportion of the group aged 35 to 50 is the highest. “The warming of jewelry consumption is also closely related to the innovation of jewelry manufacturers in recent years. In particular, many brands have launched new craft products such as gufajin and 5g, and the sense of design is closer to the needs of main consumers.” Cheng Wei said.
in 2022, the gold market is still generally not optimistic about
The rapid conversion of gold, silver and precious metals makes it more difficult to predict the market in 2022, but institutions still generally predict that the prospect of the gold and silver market in 2022 is still not optimistic with the fermentation of monetary tightening expectations and the continued economic recovery. However, silver with more commodity attributes may outperform gold.
According to the report of Guotai Junan Securities Co.Ltd(601211) futures, the key factors affecting the precious metal market in 2022 are the rise of nominal interest rate, the rebound of inflation expectation and the rise of US dollar. “It may not be the absolute value of the nominal interest rate that affects the gold price.” Guotai Junan Securities Co.Ltd(601211) futures analyst Wang Rong believes that as the Fed’s interest rate hike has become a market consensus, the interest rate hike itself is not the main factor driving the market, and the difference in the expected change of interest rate hike will be the key to affecting the gold market.
“Under the expectation of the normalization of the Fed’s monetary policy, the rising rate of precious metals has probably crossed the inflection point.” The report of BOC precious metals believes that if the Fed withdraws from asset purchase as planned and gradually increases interest rates, tightening expectations will undoubtedly put pressure on gold prices, and the trading logic of the market will follow the rhythm of the Fed meeting.
In the view of many institutions, among the main precious metals, silver may perform better than gold. “Compared with silver, gold has more long-term investment value, but in the environment of large market changes, the rebound of silver is often greater.” Cheng Wei said that many studies believe that at present, the gold silver ratio has exceeded 80, far higher than the average value of 40 to 50, which means that the silver price is undervalued. With the economic recovery and the recovery of silver industrial demand, the supply and demand situation of silver with more commodity attributes may improve.
As a precious metal with strong conductivity, silver is used as a key component in almost all electronic applications. According to the previous report of the world silver association, the demand for silver in printing and flexible electronic products will reach 74 million ounces by 2030, compared with 48 million ounces in 2021, an increase of more than 50%.
(Xinhua Finance)
