Recently, the international gold price has continued to adjust at a high level. This week, the New York Mercantile Exchange*** briefly broke through the $2,150 ounce mark, hitting a record high since May this year. Gold prices have seen significant selling pressure after reporting job openings in the U.S. at their lowest level since 2021. Affected by this, this week, Caibai Jewelry, Chow Tai Fook and other **jewelry brands of pure gold jewelry** also showed large fluctuations.
Analysts said that there are multiple factors behind the recent high consolidation, and the Fed's interest rate cut expectations are the key reason. Is a new bull market coming?Is it a good time for the average investor to invest in the **?
Expectations of Fed rate cuts boosted gold prices**.
The data shows that since the beginning of this year, the trend of international gold prices has fluctuated greatly. In May, the gold price hit as high as $2,140 an ounce, up nearly 14% for the year, and has since appeared. However, since October, this round of gold prices has been launched, and the international gold price has accumulated more than 10%.
Why has it been climbing recently?Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, pointed out that in recent years, it has been mainly driven by major systemic and unconventional policies in Europe and the United States, and the recent increase in volatility is mainly due to the market's increase in bets on the Fed's interest rate cut next year, the sharp weakening of U.S. bond interest rates and the U.S. dollar, and geopolitical tensions and other factors, which have supported the market.
With the Federal Reserve raising interest rates aggressively before, US inflation has cooled significantly. Deutsche Bank** last month** that the US Federal Reserve will cut interest rates by 175 basis points in 2024.
Yang Delong, chief economist of Qianhai Open Source, said that the US CPI recorded a year-on-year increase of 32%, lower than the previous market expectation. "The market began to expect that the Federal Reserve has ended the current round of interest rate hike cycle, and may even enter the rate cut cycle in the second half of next year, which has played a role in gold prices**. He noted.
The U.S. Treasury interest rate is the anchor of short-term pricing, and the gold price has an inverse relationship with the U.S. Treasury interest rate. Huatai researcher Shi Cheng pointed out that as the Fed's liquidity crunch came to an end, the U.S. Treasury interest rate peaked and fell, which will bring hedging and investment demand to the world.
Zhu Zhigang, vice president and chief analyst of the Guangdong Provincial Association, said that the rise in gold prices was also due to the strong demand for gold by global central banks and their vigorous purchases.
According to the third quarter of the Global Demand Trends Report released by the World Association, global central banks continue to buy gold strongly. Global central banks made 337t of net purchases in Q3, the third highest quarterly net purchase on record. And so far in 2023, global central bank gold purchase demand has reached 800 tons, breaking a new record since the association had such statistics.
The results of a recent survey by the association also showed that central banks around the world are increasingly pessimistic about the status of the US dollar reserve currency, and as a result, 24% of central banks intend to increase their positions** in 12 months.
The central banks that have bought gold aggressively are mainly the central banks of emerging countries. In China, for example, it has increased its holdings for 12 consecutive months. Ye Qianning, head of the financial team of GF** R&D Center, pointed out.
Zhou Maohua said that since the beginning of this year, central banks have vigorously purchased **, mainly to comply with the global development trend, optimize and diversify the structure of official reserve assets, improve the stability of official reserves, and enhance the ability to resist external risks.
Can gold prices remain high?
After making a new high, what will be the trend in the coming period?
Although a number of Wall Street investment banks have given expectations that the international gold price will hit $2,300 an ounce next year, or even a better range, industry insiders said that the long-term trend of gold prices in the future is still facing many uncertainties.
In the short term, lower-than-expected inflation in the United States in October has consolidated the basis for the Federal Reserve to pause interest rate hikes, and gold prices have been boosted, with a target price of $2,000-$2,200 an ounce at the end of the year.
Zhu Zhigang said that if the gold price can stand firm around $2,000-2,300 an ounce in the next period, then the future gold price is more likely to return to more than $2,100 an ounce, but the possibility of falling below $2,000 an ounce is still not ruled out.
Many consumers said that when buying their favorite **jewelry or **investment products, they will pay special attention to the changes in gold prices. "December is also the traditional peak season for gold, so it is very likely that the gold price will remain high. Zhu Zhigang believes that from the end of this year to the beginning of next year, it is the time of the European and American shopping season, the Indian wedding season and the Chinese Lunar New Year, the demand of these major consumer countries is expected to remain strong, and we should be wary of the sharp rise in gold prices.
Ye Qianning suggested that the follow-up should focus on the economic situation in the United States and the impact of fiscal policy and monetary policy on gold prices, and consider starting at a relatively low level near $1,900 an ounce.
Southern ** reporter Zhou Meilin Li Hualian.