The two attributes of gold “safe haven” and “anti-inflation” are “hurricane”
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In just one month, the international gold price broke through the two major round-number barriers of US$1,900 and US$2,000. Despite the recent price correction, since March this year, gold denominated in U.S. dollars and renminbi has accumulated relatively large gains, and has performed eye-catching among many assets. As the price of gold returns to historical highs again, how gold will perform has become the focus of investors’ attention.
“The performance of the gold market after the Spring Festival this year has indeed exceeded expectations.” Cheng Wei, an investor who has been following the gold market for a long time, told reporters that due to strong expectations of economic recovery, the price of gold fell sharply in February, falling back to around $1,800 per ounce. It shows that since March 9, the international gold price has continued to rebound, and the gold price in the New York market once returned to above US$2,000 per ounce.
At the close of trading on the 28th, the April contract, the most active gold futures traded in the New York market, closed at $1,973.5 an ounce, a cumulative increase of about 8% this year. The rise in the domestic market is relatively moderate. The gold spot deferred transaction Au (T+D) on the Shanghai Gold Exchange closed at 435.35 yuan per gram on the 28th, and the market rose by less than 7% during the same period.
“The trigger is the closure of Silicon Valley Bank.” Ji Ming, chief analyst at the Trading Center of Shandong Gold Group, believes that the recent risk events of European and American banks such as Silicon Valley Bank and Credit Suisse have continued to ferment, driving market risk aversion to heat up. The liquidity crisis has also limited the monetary tightening space of European and American central banks, and market concerns about inflation have risen.
Gold’s two attributes of “safe haven” and “anti-inflation” are “hurricane”, attracting funds to return to the gold market. According to data, the amount of gold held by SPDR, the world’s largest gold ETF fund, has risen to around 927 tons, an increase of about 10 tons from the end of February, reversing the lingering trend from January to February in one fell swoop.
As the world’s largest gold consumption market, domestic gold consumption also continues to be strong. “Whether it is gold jewelry or gold bars, sales have increased by about 20% this year.” Cao Guosheng, general manager of Shanghai Laofengxiang Silver Building flagship store, told reporters that the price of pure gold jewelry has reached about 570 yuan per gram recently, compared with At the end of last year, it rose by more than 30 yuan per gram.
In Cao Guosheng’s view, the sales of the gold market are booming. In addition to factors such as risk aversion in the international market that drive the price of gold to rise, the domestic market’s epidemic prevention and control policies have been optimized and adjusted, and weddings and other activities have gradually resumed, which has also driven the sales of gold jewelry. “March is not the peak season for gold sales, but this year is more prosperous, especially for large wedding gold jewelry sets, which can sell several sets a month.”
On the 28th, the reporter saw at the Wushangmeng Times, a commercial complex in Wuhan, that just after opening for business, there were many customers choosing from various gold stores. “Gold trinkets such as fortune beads in the year of birth are very popular, and some popular styles are sold out.” A clerk at the Jinzhizun Gold Store said.
“Although the data for the first quarter has not yet been released, many companies have reported that the gold market has recovered significantly since the Spring Festival.” Zhang Yongtao, vice president and secretary-general of the China Gold Association, said that on the one hand, orders from gold processing companies in Shenzhen have increased significantly , On the other hand, the terminal sales of brand enterprises including Zhongjin Jewelry, Laomiao, and Caibai have rebounded rapidly.
As an indicator reflecting the overall consumption situation in the domestic market, from January to February this year, the gold outbound volume of the Shanghai Gold Exchange exceeded 307 tons, which has basically returned to the same period before the 2019 epidemic.
In Chow Sang Sang’s gold shop in Pudong, Shanghai, Tian Rong, a financial practitioner who plans to buy gold bars, told reporters that the recent performance of gold prices seems to have reactivated some investors’ “belief” in gold.
“Since August 2020, the international gold price hit the US$2,000 per ounce mark three times, but each time it broke through and fell back quickly. Especially in the face of geopolitical events such as the conflict between Russia and Ukraine, the gold market was suppressed by the strong US dollar. Recent risk events including Silicon Valley Bank have made people around me re-understand the multiple attributes of gold, especially its currency attribute has not disappeared.” Tian Rong said.
However, as the price of gold returned to its previous high, the market divergence is also increasing, and the gold repurchase fever is gradually heating up. “The cost of the gold bars I bought before was about 300 yuan per gram. According to the recent price, the floating profit of the repurchase has reached about 200 yuan per gram.” Mr. Qiu, an investor who plans to participate in the repurchase in China Gold Store, said, “The recent price It is relatively high, and after cashing out, wait for the price of gold to fall before buying.”
“The short-term market is in a dilemma.” Cheng Wei believes that although major institutions are generally optimistic about the long-term prospects of gold, with the release of risk aversion, the price of gold may pull back, but it is difficult to fall sharply in the face of many uncertainties.
“For market participants, the first thing is to choose the right investment products and figure out the driving force of market fluctuations.” Jiang Shu, an expert in the gold market, believes that as a special investment product, among the current gold-related investments, physical gold and gold ETF Gold futures, gold futures and spot continuous trading are different, and the risk level is also different. For ordinary investors, gold can be used as an integral part of asset allocation, but they should not rashly participate in high-risk transactions.
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