The international gold price fluctuated like a storm in December. In just a few days, London spot gold** broke the all-time record of $2,100 per ounce for the first time, straight to $2,146$79 oz an all-time high.
However, after reaching an all-time high, the price of gold fell off a cliff**, and at one point fell sharply back to below $2,020 per ounce.
This round of ups and downs in international gold prices has aroused widespread attention, and market analysts have tried to analyze the reasons. It can be seen that this gold price fluctuation is the result of a combination of factors:
Market expectations for the Fed's policy pivot. In recent months, inflationary pressures in the United States have increased significantly as commodities such as oil and food have soared.
In order to curb inflation, the market generally ** the Fed may adopt easing policies such as interest rate cuts. Such expectations once drove capital inflows into safe-haven assets such as **, driving the rapid growth of gold prices**.
But then, as the Fed** signaled that it would not be overly accommodative, market expectations for a rate cut weakened. As a result, the hot money that had poured into the gold market began to withdraw, resulting in a cliff-like gold price.
Changes in the global economic situation are also affecting gold prices. At present, the world's major economies have shown varying degrees of recovery momentum, and capital has re-flowed into high-return assets such as ** and bond markets.
And the global economy is facing many uncertainties such as inflation and energy crisis, which makes investors close their positions in time after making profits, and the combination of these factors also weakens demand and boosts the decline in gold prices.
At the same time, the geopolitical dynamics have had a subtle impact on the gold market. In the past period of time, the turbulent situation in the Middle East, the tension in Ukraine and other unstable factors have been staged, which has stimulated risk aversion and pushed up ***, but with the gradual easing of related problems, this risk aversion behavior has also begun to weaken, triggering a certain ***
It can be seen that the large fluctuations in the international gold price are the result of the interaction of various market factors. Among them, the direction of the Fed's monetary policy is particularly crucial. The Fed's policy directly affects the direction of the flow of funds in the market, and as a safe-haven asset, its trend is extremely sensitive to the market's risk appetite.
Specifically, the Fed's interest rate policy will have a driving effect on the flow of capital between various types of assets. When the Fed raises interest rates, the investment threshold for other assets will be raised, making low-risk ones relatively more attractive.
Conversely, as interest rates fall, speculative capital flows back into risky assets, putting gold prices under pressure. In addition, the market liquidity released by the Fed's quantitative easing policy will also have an impact on gold prices.
A large-scale low interest rate environment could push up inflation expectations and exacerbate market turmoil, which could drive risk aversion and drive investors to chase after it**. But if this expectation proves to be too aggressive, then there will be a pullback in the event of an unexpected tightening of monetary policy.
Geopolitical conflicts can also have a variable impact on Fed policy. When there are events such as wars and sanctions, the resulting risk aversion will prompt the Fed to be more accommodative in policy to ensure market stability.
This policy adjustment will also have a second impact on the safe-haven asset market such as **. It is precisely because of this that the international gold price shows abnormal volatility.