（Source: China Banking and Insurance News 2024-11-18)
The price of gold has been falling for several days. After breaking through the historical high of US$2,800 per ounce at the end of October this year, COMEX gold prices experienced a significant correction. As of November 15, the COMEX gold price has fallen to US$2,567.40 per ounce, a cumulative decline of nearly 9% in half a month; the domestic gold futures December contract price has also fallen below 600 yuan per gram, down more than 7% from the year's high. Based on the recent continued large fluctuations in precious metal prices, on November 14, the Shanghai Gold Exchange issued the "Notice on Effectively Controlling Recent Market Risks", reminding all member units to continue to make detailed risk emergency plans to maintain the smooth operation of the market, and to remind investors to do risk prevention work, reasonably control positions, and invest rationally.
Multiple factors trigger the fall in gold prices
Chen Hao, director and researcher of the International w88 Research Office, Institute of International Economics, w88 casinobelieves that from the perspective of supply and demand, the gold price has been running at a high level for a long time and has increased significantly, which has changed the consumer preference structure and the supply and demand relationship in the gold market. Holders tend to sell because of the high price, while potential demanders are afraid to buy because of the high price, resulting in weak growth in gold demand, which in turn triggers a fall in gold prices. Fan Ruoying, a researcher at the Bank of China Research Institute, said that from an international perspective, with the end of the U.S. election, global market risk aversion has subsided, and some funds have been withdrawn from the gold market. In addition, after Trump came to power, the market generally believed that Trump's proposal to impose additional tariffs would drive up inflation, and market expectations for interest rate cuts have cooled, pushing the U.S. dollar and U.S. bond yields to continue to rise, causing a correction in gold prices. Fan Ruoying analyzed that gold can be regarded as a "zero-coupon bond" based on its financial attributes, and gold prices are often negatively correlated with U.S. bond yields. "But since 2023, the correlation between the two has weakened significantly. This is mainly due to the greater uncertainty in the pace of the Federal Reserve's interest rate cuts in the early stage, which has led to a longer accumulation period of market interest rate cut expectations, and the price of gold has jumped ahead to a certain extent. At the same time, geopolitical risks have increased, driving global risk aversion to continue to rise, and gold's safe haven properties have The impact on pricing is more obvious. Recently, the negative correlation between U.S. bond yields and gold prices has returned. The reasons are: on the one hand, global geopolitical risks have eased, and the impact of gold’s safe-haven properties on pricing has weakened; on the other hand, the Federal Reserve has entered an interest rate cut cycle, and gold prices have shown the characteristics of fulfilling expectations of interest rate cuts." Fan Ruoying said.
What is the future trend of gold prices?
In the short term,ChenHaoWe believe that the price of gold may decline to a limited extent, but it is unlikely to decline significantly or continuously. Considering that the three reasons for the fall in gold prices (fundamental changes in preferences, a stronger U.S. dollar, and weakening expectations for interest rate cuts) are not sustainable, and the market structure and consumer structure have changed, if gold prices fall further, it may trigger an increase in demand. At the same time, the impact of the strong U.S. dollar (U.S. election) has gradually faded, and the interest rate cutting environment has prompted the vast majority of investors to complete asset allocation updates, and expectations of further interest rate cuts lack market support. Therefore, the overall judgment is that gold prices are unlikely to experience a particularly large or sustained significant decline. "We need to jump out of the short-term game and look at gold prices from the perspective of long-term asset price operations." Fan Ruoying said. Fan Ruoying added that gold, as a special precious metal commodity, has three attributes: currency, finance, and commodity. Together, they create gold's functions of hedging, investment income, and anti-inflation. Monetary attributes have redefined the value of gold over a long period of time, while financial attributes and commodity attributes jointly have an important impact on the rise and turning point of gold prices. Fan Ruoying believes that in the short term, after Trump takes office, the U.S. inflation situation and changes in the Federal Reserve's monetary policy will face greater uncertainty, which may put greater pressure on gold prices in the short term. However, in the long term, under the combined influence of factors such as the continued "de-dollarization" of global central banks, rising global geopolitical uncertainty, and the Federal Reserve still in the interest rate cutting cycle, it is expected that gold prices will still have rising momentum in the future. Historically, there have been two gold rising cycles from 1971 to 1980 and 2002 to 2011 that lasted about 10 years; the current round of gold price rise started in 2020 and has gone through about 4 years and is not expected to be over yet.
Short-term arbitrage risk is greater
"Chinese people have a long tradition of investing in gold. Many people believe that gold is an immutable store of value. However, the price of gold does not just rise and fall. There are also risks in investing in gold. The price of gold is affected by many factors, and sometimes the fluctuations are relatively large." Dong Ximiao, chief researcher of China Merchants Union, said. Chen Hao reminds investors that if they want to hold it for a long time, gold as a hard currency and investment product is a sustainable choice. When choosing investment products, it is recommended to choose gold bars rather than jewelry gold to reduce costs and increase investment value. However, if it is for short-term arbitrage, the current risk may be greater and the price may be higher, so it is recommended to wait for a while. Chen Hao believes that in the medium and long term, gold prices may rise after a short-term decline, but the speed and magnitude may not be very fast. This depends on the speed of the global economy, especially the developed countries in Europe and the United States, recovering from the economic recession. Overall, gold is still an important value-preservation and appreciation product. There is room for gold prices to rise in the medium and long term, but they may not rise rapidly unless there are major economic and political changes in the international market. "Based on your own investment experience, investment capabilities and risk preferences, you must make an asset allocation suitable for individuals and families, and do not easily chase the ups and downs. In short, when investing in gold, you must choose a method that suits you and a product you understand, and do not follow the trend or blindly invest." Dong Ximiao said.
Attachment: Original link
https://mp.weixin.qq.com/s/xwfMh78tl_GGaTEJOlrIww
