Recently, the gold market has started a rising mode, and gold futures and spot prices have hit record highs. Since March, the international gold price has increased by more than 6% in less than 10 trading days. As an interest-free asset, why did the price of gold rise strongly? How long can the "gold fever" last in the future? The reporter conducted an interview.
International and domestic gold prices rose collectively.
"After the price of gold fluctuated and rose in 2023, most of the market expected that it would hit a new high in 2024, but it was generally expected to be around the middle of the year. I didn’t expect it to come so fast." Referring to the recent strong rally in the gold market, gold market analyst Cheng Wei told reporters.
Since March, gold futures in new york market once stood above $2,200 per ounce. By mid-day trading on the 12th, new york gold futures were still hovering around $2,190 per ounce, with a cumulative increase of more than 6% in less than 10 trading days. Driven by this, the price of gold denominated in RMB also rose strongly. AU99.99, which is active in spot gold trading in Shanghai Gold Exchange, and the main contract of gold futures in Shanghai Futures Exchange both rose to about 508 yuan per gram, and the market increased by more than 5% in the same period.
In the terminal market, the quotation of gold jewelry in most gold shops is above 650 yuan per gram, and the quotation of investment gold bars is above 520 yuan per gram. On March 11th, the reporter saw in many gold shops in Shanghai that consumers’ enthusiasm for gold was still high. Wang Ling, a consumer, told reporters that the plan to buy gold ornaments for the elderly in the second half of the year was advanced after seeing the recent rapid rise in the price of gold.
It is worth noting that with the strong rise of gold price, the market disputes about the time of buying and selling again, and some investors who bought at a lower cost in the early stage also chose to sell at a high point to "realize".
Why did the price of gold rise strongly?
Why did the price of gold rise strongly at the beginning of the year? "This year, the gold market seems to be replicating the market performance in early 2023." Cheng Wei believes that at the beginning of 2023, the depreciation of the US dollar and a series of risk events such as the bankruptcy of Silicon Valley banks have become the main driving factors for the rise of gold prices. Recently, the expectation of monetary policy shift in Europe and the United States and the continued geopolitical risk concerns have become the main driving factors.
"The recent rise in gold prices, on the one hand, is that the Fed’s interest rate cut expectation continues to heat up, on the other hand, the demand for physical consumption is strong, which also makes gold assets perform better than other assets." Lu Weijia, trading director of Hershey Precious Metals in China, believes that some economic data in the United States have slowed down investors’ worries about inflation, and the market’s bet on interest rate cuts has warmed up again. Although the gold held by SPDR, the world’s largest gold ETF fund, has declined, the increase in holdings by the central banks of China and Turkey has made up for the outflow of the market, and the strong consumption of gold during the Spring Festival in China may continue to increase.
However, some analysts also pointed out that the current gold price has been included in the interest rate cut expectations of some European and American central banks, and investors still need to be cautious in chasing up. "From the perspective of driving factors, hedging is another important factor driving the rise of gold prices." Cheng Wei believes that geopolitical events have driven the market’s risk aversion, but the impact of geopolitical events on the market is often short-lived.
High-level "speculation" needs to be cautious.
Every time the gold market rises sharply, there will always be a large number of "swarming" entrants in the domestic market, and this time is no exception. On social media platforms such as Xiaohongshu and Weibo, a large number of young consumers share their experiences in selecting, matching and purchasing, which further drives young people to recognize the consumption of gold ornaments and the investment in gold bars.
Experts in the industry believe that investment still needs to be rational, especially when the price of gold is relatively high, and participation in the gold market should be based on "stability". At present, there are many gold investment tools that domestic investors can choose, including high-risk and high-yield gold spot and futures trading, and its leveraged trading characteristics make investors face greater fluctuation gains and losses than market conditions; There are also precious metal wallets, physical gold bars, ETF funds and gold wealth management products launched by financial institutions. Investors should choose investment channels suitable for their own needs.
"For ordinary investors, investing in the gold market should be more based on long-term investment." According to experts in the gold market, such as Jiang Shu, historically, the price of gold and other assets such as stocks fluctuates in the same direction, so overseas investors often invest a fixed proportion of assets in gold, on the one hand, to play the role of maintaining the value of gold, on the other hand, they can also use the fluctuation characteristics of gold and other assets to stabilize the income of the entire portfolio.
For high-risk and high-yield investments, the timing of buying and selling is the key, and most investors need to "do more homework" to grasp the "golden opportunity". Industry experts also pointed out that although the recent rapid rise in the gold market has raised investors’ expectations, the risk of high market level needs to be vigilant. "In the short term, the gold market has been overdrawn for some time to come. Once the market expectation is repaired, the price of gold is likely to fall back quickly." (According to Xinhua News Agency)
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