Source: CMEGroup
"Precious" metal witnessing history every day
Precious metals are really "precious"! May 20, in stock gold At one time, it reached US $2450 per ounce, surpassing the intraday record set in April.
Review this year's Gold price Since the beginning of March, gold has entered a long upward cycle, rising all the way from the US $2100 threshold to the US $2200 threshold. On March 6, spot gold and COMEX gold once reached 2152.11 US dollars/ounce and 2160.7 US dollars/ounce, surpassing the record high international gold price set in December last year for the first time. Just two trading days later, on March 8, the spot gold price broke through the historical high again, just a short distance from 2200 dollars/ounce. Since then, although the gold price has undergone short-term consolidation, in late March, the gold price once again broke the historical record to 2236.05/ounce.
Entering the second quarter, the international gold price continued the "strong" market in March. In the first ten days of April, the most ferocious rise, gold prices are "witnessing history every day". Until April 19, after the spot gold price hit 2419 dollars/ounce in the session, the gold price trend showed a wave of adjustment, once falling below the 2300 dollar threshold, but followed by another round of steady rise. Since May, the gold price has always been in a fluctuating upward range until May 20, when it reached a new high.
What Causes Gold to "Brake" the Car
Is gold really unable to brake the car? Behind this wave of gold price rise, the frequent geopolitical events, the continuous fermentation of global uncertainty, the gradual realization of the Federal Reserve's interest rate cut expectations and the decline of the US dollar are intertwined, which together promote the soaring of the gold market.
First, the frequent geopolitical events have made global investors worried about the economic prospects. From the conflict between Russia and Ukraine, to the tension in the Middle East, to the tension in Asia, these events have brought uncertainty to the global economy. In particular, on May 19, the helicopter taken by President Lehi of Iran crashed in the northwest East Azerbaijan Province, killing Lehi, Foreign Minister Abdullahian and other accompanying personnel. This has improved the risk aversion in the market and supported the gold price as a safe haven asset. In this context, investors generally seek to hedge assets, and gold, as a traditional hedging tool, naturally becomes the first choice of investors.
Secondly, the continuous fermentation of global uncertainty has also accelerated the upward momentum of gold. With the rise of global trade protectionism and the intensification of climate change, the prospects for global economic growth are facing many challenges. In this case of increased uncertainty, investors' confidence in traditional assets such as the stock market and bond market has declined, and they have instead invested in safe haven assets such as gold.
Moreover, the gradual realization of the expectation of the Federal Reserve to cut interest rates has also had a positive impact on gold prices. The US inflation data released last week was lower than expected, and the market's expectation of the US Federal Reserve cutting interest rates twice this year has risen, which also supports the gold price. The consumer price index (CPI) of the United States fell in April as a whole. US CPI rose 0.3% month on month in April, lower than 0.4% in March; It rose 3.4% year on year, down slightly from 3.5% in March. Excluding the volatile food and energy prices, the core CPI of the United States rose 0.3% month on month in April, up 3.6% year on year, both lower than the level in March.
With the weakening of US economic data and the trend of slowing global economic growth, the Federal Reserve's expectation of interest rate reduction has gradually increased. According to the observation tool of the Federal Reserve of the Chicago Mercantile Exchange, the market currently expects that the possibility of the Federal Reserve cutting interest rates by at least 25 basis points at the September meeting is 63.3%. The interest rate cut will reduce the cost of holding gold and improve the relative yield of gold, thus attracting more investors into the gold market.
Finally, the decline of the US dollar has also provided support for the rise of the gold price. As an international reserve currency, the trend of the US dollar has an important impact on gold prices. Recently, with the intensification of global trade tensions and the weakness of U.S. economic data, the dollar index has continued to decline. The decline of the US dollar will make the price of gold denominated in US dollars rise relatively, further attracting investors to enter the gold market.
Can the soaring gold continue to be bought?
Under the support of many factors, gold seems to be unable to brake, but does this mean that gold will continue to soar, and investors can continue to buy it?
In the long run, gold, as a safe haven asset, is widely recognized for its investment value. Against the background of increasing global economic uncertainty and frequent geopolitical events, the hedging nature of gold will be further highlighted. In addition, with the gradual realization of the expectation of the Federal Reserve to cut interest rates and the continuation of the downward trend of the dollar, there is still room for gold prices to rise.
However, investors also need to pay attention to risk control when buying gold. On May 22, spot gold closed down more than 40 dollars, falling below 2380 dollars/ounce and closing at 2378.44 dollars/ounce. The minutes of the Federal Reserve issued hawkish remarks, which strengthened the dollar and hit the gold price trend. This also shows that the gold market is full of huge volatility risks, and investors need to use some derivatives to hedge risks when allocating assets.
The gold futures (product code: GC) of Zhishang Exchange is a very good derivative tool, and it is also one of the most widely traded futures products in the world. It has abundant liquidity, and the daily trading volume is close to 27 million ounces; Higher capital efficiency: participating in metal futures trading in one exchange,; Physical settlement: because futures contracts are closely related to the spot market, sliding point costs can be reduced; Close to 24-hour electronic trading: when global news and events affecting the gold price occur, it is more convenient to manage positions;. In addition to standard gold futures contracts, Chicago Board of Commerce also provides small-scale mini gold futures contracts (QOs) and mini gold futures contracts (MGCs).
To sum up, although the international gold price has been soaring recently, investors still need to pay attention to risk control when buying gold. The allocation of gold futures in the investment process also provides investors with a diversified portfolio opportunity. By combining gold futures with other financial instruments (such as stocks and bonds), investors can reduce the risk of the entire portfolio and improve the stability of returns.
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Editor in charge: Zhao Siyuan
