Gold prices are soaring and safe-haven funds are pouring in. Do you still dare to buy gold during the National Day holiday?
Recently, the surge in gold prices has attracted widespread attention. The price of gold has skyrocketed, making people dizzy. What is the story behind this? Is it the uncertainty of the global economy, the change of monetary policy, or the tension of geopolitics?
As the National Day holiday is approaching, what impact will the fluctuation of gold prices have on our lives? Let us explore this phenomenon in depth.
Recently, the price of gold has risen so rapidly that it is really shocking. Have you noticed that everyone around you is discussing this topic? Whether in the circle of friends or after dinner, everyone is curious about the gold price. In fact, the rise in gold prices is not accidental, but the result of the combined effect of multiple factors.
The unstable global economic situation is an important reason for the rise in gold prices. The economic growth of many countries has slowed down, and the inflation problem has become increasingly serious, which has made people panic. Everyone wants to find a "safe haven", and gold, as a traditional asset for preserving value, has naturally become the first choice. Think about it, we used to say "buying gold is buying the future", and now this sentence seems even more true.
Meanwhile, central banks are busy adjusting monetary policies. Some countries choose to cut interest rates, some take measures to raise interest rates, and some are implementing quantitative easing policies. These policies are like steering the ship of the economy, but sometimes the control is not steady, which makes us ordinary people feel dizzy. Changes in monetary policies have caused investors to turn to gold in order to preserve value and hedge risks.
Furthermore, geopolitical tensions are also an important driver of gold price increases. The recent international situation is turbulent, and the tensions between some countries are like time bombs that may explode at any time. In this case, people will naturally choose to buy gold as an "insurance policy". Whether it is the threat of war or trade friction, gold can provide us with a sense of psychological security.
Moreover, this year's National Day holiday is coming, which is one of the most anticipated times of the year. Due to the soaring gold prices, this year's National Day may be a little different. In previous years, everyone would actively buy gold jewelry, gold bars, etc., but this year everyone may be more cautious in spending. After all, the current gold price makes many people stay away.
Imagine that in the past, people might buy gold jewelry for festive occasions or to preserve value, but now they have to weigh their wallets carefully. The National Day holiday should be the peak season for gold consumption, but now people may consume more rationally, perhaps choosing some cost-effective gold and silver jewelry, or looking for more favorable prices online.
The tourism industry has also been affected by gold price fluctuations. The National Day holiday has always been a peak tourist season, but as gold prices rise, some gold-themed tourist attractions may welcome more tourists. On the other hand, some people have reduced their travel budgets due to the high gold prices and have chosen more cost-effective travel methods.
For investors, this period is also an important time to observe the market and adjust investment strategies. Some people may take the opportunity to buy in the hope that the price of gold will continue to rise, while others may choose to sell to lock in profits. In this market full of variables, investors need to make wise decisions based on their risk tolerance and investment goals.
01
Hot money pours into gold ETFs
As gold prices continue to soar, gold's safe-haven investment attributes have also attracted market attention. Many investors continue to be bullish on gold and increase their positions to bet on further increases in gold. The increase in holdings of the world's largest gold ETF, SPDR Gold Trust, reflects the rising market demand for gold. The hot performance of gold ETFs is not limited to the international market. Domestic gold ETFs have also shown a differentiated trend, and some products have attracted a large amount of capital inflows. The characteristics of gold as a safe-haven asset have become increasingly prominent in the current economic environment, driving the prosperity of the ETF market.
"Judging from the recent position data, the dates with large position changes are basically consistent with the market's expectations for changes in the Federal Reserve's monetary policy. For example, before and after the release of non-farm, CPI, PCE and other data, position changes are more obvious. Judging from the rhythm of positions, positions have continued to increase for most of the past two months, reflecting the market's increasing expectations for easing." Zhu Jintao said.
Zhu Jintao said that the change in positions in the past two weeks was relatively small, reflecting that after the interest rate cut, market sentiment has entered a stable state, while the position volume has increased most of the time, reflecting the market's optimistic expectations for the Fed's continued easing. It is expected that the disturbance of key data, especially employment data, will still be the main driver of position changes, and attention will be paid to whether the US economic data can achieve a soft landing.
As the international gold price rises, foreign investment banks are also bullish on gold. Zhu Jintao said that the rise in the international gold price is indeed related to the re-entry of Western capital into the gold market, which is a component that is basically non-existent in the sharp rebound in gold prices observed in the past two years. The previous sharp rebounds in gold prices were mainly affected by the positive impact of the geopolitical situation, and the safe-haven attribute was the main driving force for the market to increase its holdings of gold.
Although the expectation of interest rate cuts also has strong support for gold prices, the impact is more short-term, and gold prices have experienced different degrees of correction. Currently, investment banks that are bullish on gold include JPMorgan Chase and Citigroup. In a report in June this year, JPMorgan Chase predicted that the price of gold may reach $2,500/ounce by the end of 2024 and further rise to $2,600/ounce in 2025.
Analysts at Citigroup believe that if the global economy is likely to experience stagflation or a deep recession, the price of gold may soar to $3,000 per ounce within 12 to 18 months. In addition, the latest gold price forecasts from institutions such as Goldman Sachs, UBS, TD Securities and Bank of America also show that the Fed's interest rate cut path is still subject to revisions, which will expose gold to both upside (recession and interest rate cut combination) and downside risks (inflation rebound, stagflation), but overall, the price of gold will continue to rise before 2025.
02
How long can the international gold price continue to rise?
The recent record highs in international gold prices are mainly due to the Federal Reserve's interest rate cut cycle and the intensification of geopolitical conflicts. As for the interest rate cuts in November and December, the market expects that the probability of an increase in the interest rate cut is increasing. The preliminary values of the US Markit Global Manufacturing PMI and Services PMI for September were recently announced, and the data were lower than the previous values. In addition, the consumer expectations index, confidence index and current situation index were also announced, all of which were significantly lower than the previous values, reflecting a decline in consumer expectations and an increase in expectations for interest rate cuts.
"Powell gave a speech after the interest rate meeting on September 19. Powell said that the overall economy is currently strong, the labor market has cooled down from its previous overheated state, and the upside risks of inflation have weakened. However, the downside risks in the labor market have increased, and meetings will be held successively in the future to decide on interest rate policies. Powell's statement reflects that subsequent interest rate policy arrangements will be adjusted based on actual data, and no commitments have been made in advance." He Yi said.
In addition, the Federal Reserve started a rate cut cycle in September, and overseas financial markets gave positive feedback, risk appetite gradually recovered, the US dollar index weakened, and US stocks and gold performed well, especially for gold, which continued to set new historical highs and attracted the attention of global investors again. At the same time, the outlook for the US labor market and the overall economy is worrying, and the weak data has also increased the market's bet that the Federal Reserve may once again cut interest rates beyond expectations.
"Judging from the dot plot and CME data, the Federal Reserve may still cut interest rates by more than 50 basis points this year, but judging from the predicted probability, the probability of a 25 basis point cut in November and December is still relatively high. This means that unless there is another unexpected rate cut, the next rate cut will be more neutral than this one, and will not be considered more relaxed," said Zhu Jintao.
In addition, recent geopolitical tensions have further intensified. The conflict between Israel and Lebanese Hezbollah has shown signs of expansion. Embassies and consulates of Western countries have issued announcements calling on their nationals to evacuate the Middle East. The increase in U.S. troops in the Middle East indirectly illustrates the possibility of the situation getting out of control. , which undoubtedly increases market uncertainty and enhances the safe-haven demand for gold. When political and economic uncertainty increases, gold's safe-haven asset properties have a particularly significant impact on gold prices.
However, as the gold price continues to rise, He Yi suggested that ordinary investors can buy gold ETFs or physical gold bars for gold investment. When buying physical gold, they must go to formal institutions and units to buy and keep relevant certificates. In the short term, the technical indicators of international gold and Shanghai gold are both in an overbought state, but the short-term buying sentiment of funds is still excited. It is not recommended to chase high prices. It is safer to buy after a correction or stabilization. The medium- and long-term logic still supports the rise of gold. In the future, gold is expected to set new highs. In the short term, it is affected by emotions and there is a risk of correction at any time.
In addition, regarding the future trend of international gold prices, Zhu Jintao said that as the Federal Reserve officially joins the army of interest rate cuts, the easing cycle is generally optimistic about the upward momentum of gold prices. However, if the US economy and inflation data rebound during this period, the speed of gold price increases may gradually slow down or even fall back, and investors still need to remain cautious.