gold Historical price trend

Historically, before the 1970s, the international gold price was relatively stable with little fluctuation. Since the 1970s, the international gold price has fluctuated frequently and greatly, with the lowest price of 253.8 US dollars/ounce (July 20, 1999) and the highest price of 1430.2 US dollars/ounce (December 7, 2010).

At the end of the 1970s, the price of gold rose sharply, mainly due to the collapse of the Bretton Woods system. Since gold has the function of international reserve, the change of international gold official reserve will directly affect the change of international gold price. With the end of the Bretton Woods system, the floating exchange rate system stepped onto the historical stage, and the monetary function of gold was weakened, while its function as a reserve asset was strengthened. The increase of official gold reserves in various countries has directly led to a sharp rise in international gold prices.

After the 1990s, central banks began to re view the role of gold in foreign exchange reserves. The increasing independence and marketization of the central bank make it more emphasis on the return of reserve asset portfolio. In this context, the position of gold without any interest income (except that it can get a little profit from participating in the lending market) has declined. Some central banks decided to reduce gold reserves. As a result, the amount of gold reserves in 1999 was 10% less than that in 1980. It was the selling of gold by major countries that led to the long-term downturn in gold prices.

Entering the 21st century, economic and financial globalization has gradually deepened, inflation has begun to rise, and the international gold price has gradually strengthened from the downturn. After the international financial crisis in 2008, the rapid growth of gold investment demand has driven the international gold price to new highs.

　　 influence factor

International political situation

Major international political and war events can affect gold prices. The government spent a lot for war or to maintain the stable growth of the domestic economy. The political situation was turbulent, and a large number of investors turned to gold investment. The demand for gold expanded, stimulating the gold price to rise. For example, the World War II, the US Vietnam War, the Thai coup in 1976, the "Iran Gate" incident in 1986, etc., all caused the gold price to rise to varying degrees. For another example, the September 11 incident in 2001 made the price of gold soar to the highest price of 300 dollars/ounce that year. However, the impact of war on gold price needs to be considered comprehensively. There are also examples of gold price falling during the war in history.

Exchange rate of major world currencies

The US dollar exchange rate is one of the important factors that affect the fluctuation of gold price. Since the gold market price is marked by the US dollar, the appreciation of the US dollar will cause the gold price to fall, while the depreciation of the US dollar will cause the gold price to rise. The strength of the US dollar will have a significant impact on gold prices. However, in some special periods, especially when the gold trend is very strong or very weak, the gold price will also get rid of the influence of the dollar and go out of its own trend.

The strength of the US dollar generally means that the domestic economic situation in the United States is good. The domestic stocks and bonds in the United States will be sought after by investors, and the function of gold as a store of value will be weakened; The decline of the US dollar exchange rate is often related to inflation and the downturn of the stock market. The hedging function of gold is reflected again. When the US dollar depreciates and inflation intensifies, it will often stimulate the increase of gold hedging and speculative demand. Looking back over the past two decades, when the US dollar strengthened against other western currencies, the international gold price would fall; When the dollar depreciates, the international gold price will rise. In the past decade, there has been 80% inverse correlation between the gold price and the trend of the US dollar.

Gold supply and demand

For a long time, in terms of commodity attributes, gold production and gold consumption have limited impact on gold prices. However, in terms of financial attributes, influenced by factors such as global liquidity surplus in recent years, the rapid growth of gold investment demand has a greater impact on gold prices. After the global financial crisis in 2008, out of concern about the current global credit monetary system and the need for diversification of reserve assets, central banks began to stop selling gold and instead increased their holdings of gold reserves in different ways. Changes in the demand for gold official reserves also had a certain impact on the gold price.

Oil supply and demand

Since the prices of the world's major oil spot and futures markets are marked in dollars, the rise and fall of oil prices reflect the relationship between world oil supply and demand on the one hand, and also reflect the changes in the dollar exchange rate and world inflation rate on the other hand. Oil price and gold price indirectly interact.

Through the international crude oil Comparing the price trend with the gold price trend, it can be found that there is a positive correlation between the international gold price and the rise and fall of the crude oil futures price for more time.

Other factors

In addition to the above factors affecting gold prices, factors such as the position level of gold exchange traded funds (ETFs) will also have a certain impact on the trend of international gold prices.