Zhitong Finance and Economics learned that Everbright ** released a research report saying that it has been rapid in the near futureThis is mainly due to the loosening of Fed liquidity expectations and the decline in U.S. Treasury interest rates. In the short term, the swing in interest rate cut expectations may bring high volatility in gold prices. However, in terms of trend, the U.S. economy is cooling, the supply of U.S. bonds is falling, and the interest rate cut cycle is still expected to start, which means that the U.S. bond interest rate has a strong downward trend, opening up the gold price space. In addition, in the context of de-globalization, frequent geopolitical conflicts, the swing of the US dollar credit system, and the rise of safe-haven demand in the first year, central banks will continue to purchase gold and enter the process of "de-dollarization", which will become the support of gold prices in the medium and long term.
Events:
Recently, the performance has been strong, and the London gold ** price hit a record high of 2114 on March 43 US dollars ounce, the last 5 trading days (February 27, 2024 to March 4, 2024), London gold**41%, last 6 months (5 October 2023 to 4 March 2024), London Gold**161%。
The main points of Everbright ** are as follows:
1. The Fed's liquidity expectations have loosened, pushing up gold prices again in the near future
As mentioned earlier, ** includes the triple attributes of commodities, currencies and finance, and its ** changes mainly come from the investment demand driven by the real interest rate of US bonds, as well as the demand for safe-haven and central bank gold purchases brought about by "de-dollarization". Among them, the real interest rate of U.S. bonds is the anchor of short-term pricing, and the gold price has an inverse relationship with the interest rate of U.S. bonds. In the context of de-globalization, frequent geopolitical conflicts and the swing of the US dollar credit system have promoted central banks to continue to purchase gold, which has become the support for gold prices in the medium and long term.
Since the fourth quarter of last year, the market has expected the end of the Fed's interest rate hike cycle, pushing gold prices back to the channel, and the follow-up fluctuations mainly revolve around the Fed's liquidity expectations.
From October 2023 to December 2023, interest rate cut expectations will rise rapidly, catalyzing the upside. In early October, the Palestinian-Israeli conflict boosted the demand for safe havens. At the same time, due to the slowdown in U.S. economic data in October, the Federal Reserve's interest rate meeting in November was dovish, and the certainty of the end of the interest rate hike cycle was high, triggering a rapid rise in interest rate cut expectations and triggering **enter***
From January 2024 to mid-February 2024, interest rate cut expectations will fall, driving ***phase**. Since January, the U.S. economy and inflation data have exceeded expectations, indicating that the economy is still resilient, and premature interest rate cuts may trigger the risk of secondary inflation again. Coupled with the Fed's hawkish speech, the expectation of interest rate cuts continued**, and the market's expected rate cut point was moved from March to June, which triggered a strengthening of the dollar index and an increase in U.S. Treasury rates, **correspondingly**.
Since late February 2024, liquidity easing expectations have risen, **fast**. On the one hand, the U.S. economic data slowed down, with new orders for durable goods in January and ISM manufacturing PMI in February falling short of expectations, and the year-on-year growth rate of household disposable income in January fell significantly month-on-month. Markets are betting on a higher probability of a rate cut in June this year. On the other hand, the Fed's view is dovish, and on March 1, the Fed's **Waller proposed that the Fed should "buy short and sell long" on its balance sheet, pushing US Treasury interest rates down and rising rapidly.
Second, looking forward, the price of gold is still in the ** channel
In the short term, the downward trend of U.S. Treasury interest rates is strong, which forms an upward support for gold prices.
The most critical factors affecting the trend of U.S. Treasury interest rates in 2024 are the U.S. economy, inflation issues, and the direction of the Fed's monetary policy. In the short term, the risk of inflation in the United States has repeatedly restricted the opening of interest rate cuts, but in the environment of high interest rates, the cooling of the U.S. economy is still the main trend. Combined with the recent statement of the Federal Reserve Committee that "from hawk to dove", it is only a matter of time before the interest rate cut cycle begins. From the point of view, 42%-4.3% may be the top range of the current round of 10Y U.S. bond interest rates, and the probability of U.S. bond interest rates entering a downward channel is relatively high, which will promote the heating up of investment demand.
In the medium and long term, in the process of "de-dollarization", central bank purchases of foreign countries continue to increase, and ** is still in the third round of bull market in history.
Historically, the emergence of each round of the best bull market is inseparable from the strengthening of the first monetary attributes, reflecting the strength of all parties in the international monetary system. Since 2018, the international geopolitical situation has become increasingly complex, with the Sino-US game, the Russia-Ukraine conflict, and the Palestinian-Israeli issue continuing to emerge, and the world has entered the process of "de-dollarization", which is manifested in the decline of US dollar foreign exchange reserves and the rise of ** reserves.
Since the second half of 2022, central banks have accelerated the pace of gold purchases to support high-level operation. Taking China as an example, as of the end of January 2024, the People's Bank of China (PBOC) has increased its holdings for 15 consecutive months**, with reserves of US$148.2 billion, compared to 3With $2 trillion in foreign exchange reserves, the scale of ** reserves is still low, and there is still a lot of room for increasing holdings in the future.
In addition, 2024 could be the biggest election year ever. According to incomplete statistics, more than 70 countries and regions around the world will hold elections in 2024, covering nearly half of the world's population and nearly 50% of the world's total economy. The change of regime and policy adjustment in these countries will bring great uncertainty. Therefore, the increase in safe-haven demand in the first year also continues to catalyze central bank purchases.
Risk Warning:
The U.S. economy has been more resilient than expected; The geopolitical situation has eased.