At the opening of trading on Monday, spot gold prices continued last week's decline, falling to around US$1,765 per ounce during the day, and then rebounded. As of press time, the price of gold remains at around US$1,770 per ounce.
Spot gold price trend on November 30, source: Hexun.com
Some institutional analysts believe that as the spot gold price falls below the US$1,800 per ounce mark, the spot gold price may enter its worst month. Relevant data shows that last week alone, spot gold prices fell 4.5% month-on-month. Compared with the historical high of $2,075 per ounce in August, the current spot gold price has fallen by more than $300 per ounce.
Why did the price of gold fall crazily in a short period of time? This is closely related to the "safe haven" asset attribute of gold. Last week, several major international biopharmaceutical companies announced the latest research and development progress of the new coronavirus vaccine, and expect it to be put into the market in large quantities as early as December this year. As a result, optimism about economic recovery has quickly risen in global markets, weakening gold's safe-haven appeal. The high "risk aversion" sentiment is no longer high. When the market faces a multiple-choice question between gold and risky assets such as stocks and bonds, selling gold and choosing risky assets has become the "right answer", and a fall in gold prices is inevitable.
However, when taking into account another attribute of gold - a non-interest-bearing asset, judging the fluctuation trend of gold prices becomes more complicated. Since gold is a non-interest-bearing asset, its price is basically driven by real interest rates. When real interest rates fall, the price of gold rises. When real interest rates rise, the price of gold falls.
Looking at the global market, real interest rates are highly correlated with global quantitative easing policies, especially the U.S. monetary policy, and the inflation rate. US media reports believe that under the impact of the second wave of the epidemic in winter, the US government may further increase fiscal stimulus in the future to help the economy recover. Therefore, the real interest rate in the United States and the U.S. dollar index are likely to fall further, while the inflation rate is likely to rise further. These factors have given spot gold prices a support point to stabilize.
Citibank released a report predicting that in the short term, spot gold prices are likely to drop further and eventually remain near US$1,700 per ounce. But in the long term, spot gold prices are likely to gradually return to around US$2,000 per ounce. Bank of America is relatively optimistic about the performance of gold prices. It issued a report stating that gold prices are likely to return to more than 2,000 US dollars per ounce next year. It is now neutral in its expectations for gold prices.
and financial investment institution TD Securities believe that the current market is too optimistic about the impact of the second wave of the new crown epidemic. If future economic performance shows that the impact of the epidemic exceeds expectations, "risk aversion" sentiment will return.
column editor: Xu Meng text editor: Zhang Yu Source of title picture: Tuchong Creative Picture editor: Da Xi
source: author: Zhang Yu
