Since this year, International Yellow Gold price The trend of Georgia is strong, and the bullish bet on the international gold price in the market has risen to the highest level in four years.
The trend of international gold price has also driven the strength of domestic gold related stocks and funds. The A-share gold sector rose generally, with several stocks rising more than 12% this year. In the fund market, there were 16 mutual funds with a return rate of more than 20% in the year, and the top three products were all gold funds.
International gold price trend logic analysis
Gold has two important attributes: anti inflation and hedging. With the collapse of the Bretton Woods system, the world has entered the era of credit currency, but the function of gold as a reserve currency and means of payment has not been shaken, and it still has a certain monetary attribute. Under the credit currency system, there are inflation risks and credit crisis caused by currency excess. However, gold is a zero credit risk asset with strong anti inflation properties. As a major reserve currency in the world, the US dollar also faces US sovereign credit risk. Gold is a hedge of US dollar credit, which forms a substitution effect on the US dollar to a certain extent.
It is precisely because gold has the property of anti inflation. The higher the inflation, the gold as an anti inflation asset will be pursued. However, as gold cannot bear interest, its speculative demand is affected by the opportunity cost. The higher the risk-free interest rate, the higher the opportunity cost of holding gold and the lower the gold price. Relevant research shows that from 2007 to 2022, the US real interest rate shows a stable negative correlation with the trend of gold price in most periods, and the US real interest rate is the anchor of gold pricing. In addition, as a physical asset, like other bulk commodities, gold prices are also affected by supply and demand. However, compared with other commodities, the supply of gold is relatively stable and the short-term supply is inelastic, so the gold price is more affected by the demand side. Historically, the demand structure of gold has been changing from consumption demand to investment demand and then to the current central bank's demand for gold. Therefore, the US real interest rate, geopolitical risk and marginal demand for gold are three important variables that affect gold pricing.
According to the logic of gold pricing and the actual situation of economic operation, the expectation of the Federal Reserve's monetary policy shift, geopolitical conflicts, and global central bank purchases are the main factors for the current round of strong international gold prices. Among them, the macro performance of the US economy and the expectation of the Federal Reserve to cut interest rates are the underlying logic that affects gold prices. After the monetary policy meeting in March, the Federal Reserve raised its inflation expectations for this year and maintained its expectations of three interest rate cuts in the year. As the US inflation rebounded slightly and the prospect was unclear, the Federal Reserve was still highly cautious about the timing of interest rate reduction, and the path of interest rate reduction remained uncertain.
International gold price Trend outlook
The Federal Reserve has kept interest rates unchanged for the sixth consecutive meeting since September last year. The Federal Reserve's interest rate cut mainly considers two factors: whether inflation falls back to the target level and whether the economy is weak. Although the inflation rate in the United States has eased over the past year, it is still high. In recent months, the Federal Reserve has "lacked further progress" in achieving its 2% inflation target. In this case, the Federal Reserve may postpone cutting interest rates.
Once the Federal Reserve starts to cut the federal funds interest rate, it will trigger more buying demand from wait-and-see investors, and then the international gold price is expected to hit a new high. In addition, In the case of geopolitical instability, the international gold price may remain high. together with The global central banks continue to maintain a strong buying trend, which will also help to further support the international gold price, The international gold price may reach a peak of 2500~2600 dollars/ounce this year.
Although the international gold price has remained strong recently, investors still need to be rational and alert to the high market risk. In the short term The international gold price has been overdrawn for a period of time in the future. Once the market is expected to repair, there may be a correction. Technical analysis also shows that it is currently in a short-term overbought state, and the price may fall further.
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