This week, the international gold price once exceeded US $2000 per ounce, just one step away from the historical high. Although the gold price slightly corrected over the weekend, the trend of gold price may come to a historical juncture against the background of global inflation, the Russian Ukrainian war and the decline of economic growth expectations.
up, up, up
The escalation of the war between Russia and Ukraine on March 7 raised risk aversion and pushed the price of gold futures to break through the $2000 per ounce mark on Monday, just one step away from the historical high of $2075 per ounce. Subsequently, the gold price entered a high shock, and the gold price in New York closed at US $199788 per ounce on Thursday.
Over the weekend, there was a voice of moderation in the situation in Russia and Ukraine, and the gold price slightly corrected. Gold prices in London, which closed on March 12, fell to $198777 an ounce, while gold prices in New York closed at $199347.
In the Chinese market, the price of gold has exceeded 500 yuan per gram. On March 13, the price of Caibai gold was 516 yuan per gram, and the price of Zhou Shengsheng and Laomiao gold was more than 520 yuan per gram. The soaring price of gold has aroused people’s enthusiasm to buy gold jewelry and invest in gold.
It’s easy to figure out how much gold has risen recently.
On January 1 this year, I bought 20g gold bars in China National Gold Group Gold Jewellery Co.Ltd(600916) at the price of 7520 yuan; By March 13, the price of the same 20g gold bar was 8400 yuan, which was equivalent to earning 880 yuan in more than three months with 7520 yuan. If simple calculation, the annualized rate of return of this investment is 46%.
Chen Xiaohui, senior gold investment analyst at Beijing Gold Economic Development Research Center, said that the epidemic in 2020 led to the excessive release of global liquidity. The gold price was as high as US $2075 per ounce, but the stay time was very short. This time, the gold price reached US $2070 per ounce, which was the same as that in 2020. At this time, the Russian Ukrainian war broke out, and the long and short sides launched attack and defense near us $2000 per ounce.
Risk aversion prompted an influx of funds. According to the data released by the world gold association, in February, the net inflow of global gold ETFs was 35.3 tons (about US $2.1 billion, and the scale of asset management increased by 1.0%).
Turning to the reasons for the rise in gold prices, the World Gold Council believes that the main drivers of the net inflow of global gold ETFs are: high global inflation and surging geopolitical risks.
At present, the high prices of commodities, oil and grain have pushed up the level of inflation. The US consumer price index (CPI) rose 0.8% month on month and 7.9% year-on-year in February, the largest year-on-year increase since January 1982, according to data released by the US Department of labor on the 10th.
Sinolink Securities Co.Ltd(600109) chief economist Zhao Wei believes that gold has both risk aversion and anti inflation characteristics. In history, the price of gold tends to rise in the stage of VIX volatility index (panic index) soaring or high inflation, and the real interest rate also reflects these two characteristics. After the financial crisis, the negative correlation between gold price and real interest rate has been further strengthened.
In addition, in the short term, the rise of risk aversion and economic policy uncertainty under the conflict between Russia and Ukraine is conducive to the rise of gold price.
high, high, high
So, will the price of gold hit an all-time high?
Chen Xiaohui said that in 2020, the gold price once reached US $2075 per ounce, and in 2022, the gold price again reached more than US $2000 per ounce. The price of gold fluctuated from US $1000 to US $1000 per ounce in 2011, which is similar to the price of gold in 2011.
He believes that it may be the time for the gold price to hit US $2000 per ounce. Once it breaks through, it may enter the fluctuation range of US $2000 to US $3000. It is only a matter of time before the price of gold reaches an all-time high.
Goldman Sachs pointed out in a newly released report that investors, consumers and even the central bank are at a time of global geopolitical uncertainty, and the demand for gold is increasing.
To this end, Goldman Sachs raised its gold price target for the next three to 12 months, and is expected to reach $2500 per ounce within six months.
However, at present, the volatility of gold price has become larger, and investors should still pay attention to risks and catch up cautiously.
He Qiang, a professor at the school of finance of the Central University of Finance and economics, reminded that investment in gold should consider whether the current rising demand for risk aversion in the market exists in the short term or in the long term, which requires rational analysis. Don’t chase higher and join the fun.
