In early Asian trading on December 4, the spot ** stood at 2149The $32 ounce mark rose more than 3% to refresh the all-time high, and AU9999 also rose to 487 yuan to a record high. However, there was a pullback after that. What are the reasons for the strong rise in gold prices this round?How to understand the pullback after the gold price spiked higher in early trading?How much room is there for short-term gold prices?
Figure 1: The market expects the Fed to cut rates by 125bp by the end of 2024
*: CMEGROUP, Everbright**, as of 202312.1 Dovish market expectations seem to be getting closer, Fed Chairman Jerome Powell said on December 1 that "there is no need to act in a hurry now" and "higher interest rates will slow down the economy", which the market interpreted as dovish remarks leading to *** upside. CME data on December 1 showed that the market expects the Fed to meet in March or May 2024Started to cut interest rates, and as U.S. Treasury yields continue to strengthen in 2024.
As we all know, the negative correlation between ** and the US dollar index has increased significantly, according to wind data, the correlation coefficient between ** and the US dollar index from March 1, 2022 to November 30, 2023** reached -079。The slowdown in U.S. economic growth is a high probability event, and the U.S. manufacturing PMI was 46 in November7. It has shrunk for 13 consecutive months, the longest contraction cycle in 20 years. The U.S. dollar index may continue to weaken in 2024, which is positive for gold prices.
From the perspective of coincident indicators, SPDR** ETFs have continued to reduce their positions** since May 2023 and have been increasing their positions since October 19. As of December 1, SPDR holdings were 8788 tonnes, up 30 from the low on October 196 tons. SPDRETF holdings (one of the world's leading ETFs) are highly correlated with gold price movementsAs open interest bottoms out, gold prices are bullish.
Figure 2: SPDR** ETFs have been adding to their positions since October 19, 2023
*: wind, everbright**, interval time: 20221.3-2022.12.12024 will usher in a US interest rate cut and a weaker US dollar, which is good for gold prices, and gold prices may continue to hit new highs. With the breakthrough of this **, the upside space has been opened, and the complex political and economic conditions around the world still support gold prices to maintain a strong trend in the medium and long term.
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