Source of this article: Times Weekly Author: Zhou Mengmei
Driven by the demand for hedging, London Gold (CFD) prices continued to rise at the beginning of this year, rising to US$2070.21/ounce on March 8, approaching the historical high of US$2074.71/ounce in August 2020. Since then, London gold prices have continued to fluctuate and have fallen for four consecutive months. On July 27, London gold prices fell by more than 16% from their year-on-year highs.
gold price fell, attracting great attention from the market. As a gathering place for the gold jewelry industry, a "gold buying wave" has emerged in Shenzhen Shuibei . A reporter from Times Weekly consulted several Shuibei jewelry merchants and learned that the current price of Shuibei's gold is floating around 375 yuan/g.
"I recently bought 100g of gold. I bought physical gold bars on the bank app. ." Wang Qing (pseudonym), a post-00s, told the Times Weekly reporter that she planned to take advantage of the decline in gold prices and go to Shenzhen Shuibei to buy goods. "We are all buying by pounds, not necessarily jewelry, and some people stock up on gold bars, mainly because they are optimistic about the investment value and value-preserving performance of gold."
"Affected by the lower gold price, in previous years, it was July and August during the off-season of sales, but this year it became popular." Chen Xiao (pseudonym), a staff member of Shenzhen Shuibei Zhuoxiang Gold Jewelry Store, told the Times Weekly reporter that there are obviously more individual customers coming to the counter to select gold jewelry on weekends than in the same period last year.
Online physical gold trading is also very popular. According to 10 Securities data, in June 2022, the transaction volume of gold and jewelry Taobao platform was 5.439 billion yuan, an increase of 11% year-on-year.
Although the public is very enthusiastic about gold, many industry insiders believe that for ordinary people, gold is not a good investment product.
"Gold price has risen limited and slow, and gold investment has little profit and is often short of attractiveness to investors." pan and Lin , co-director of the Digital Economy and Financial Innovation Research Center of Zhejiang University International United Business School, told the Times Weekly reporter.
Panhe Lin pointed out that gold investment can be divided into futures and spot. Futures investment is supported by leverage , which is more suitable for professional investors; spot investment is the first choice for ordinary investors. Generally, you can choose gold ETF fund in securities category and physical gold in bank category.
"Most gold investors amplify returns through leverage, but they also bear greater risks. Therefore, ordinary investors should make appropriate allocations in gold investment, but they cannot use gold investment as the main investment path." Pan Helin said.
"For ordinary investors, gold is not a particularly good investment product." Huang Dazhi, a researcher at of Star Chart Financial Research Institute, told the Times Weekly reporter that gold is an international commodity . The price trend is affected by various factors, and the price trend has a large future market volatility, which is difficult for ordinary investors to judge. He also added that physical gold has the attributes of consumer goods, and the risk of ordinary people is relatively small; if it is used to configure gold futures, or paper gold and other varieties, the risk is greater.
Market insiders generally believe that the decline in gold prices is mainly affected by the adjustment of the monetary policy of the Federal Reserve beyond expectations.
"The increase in the size of the Federal Reserve's balance sheet is often accompanied by the rise in gold prices. When the scale of the Federal Reserve's balance sheet tends to stabilize or fall, gold prices will also fall." Founder's medium-term futures team pointed out that in the first half of this year, the geopolitical situation and the adjustment of the Federal Reserve's monetary policy have successively become the core influencing factors of the gold trend.
"In the second quarter, although the geopolitical situation was still deteriorating, its impact on the gold trend was weakening; under high inflation, the Federal Reserve accelerated its tightening of monetary policy, causing the precious metals to fall at a high level." Founder Medium Futures said that factors such as continued inflation rise, concerns about economic recession and liquidity status also affected the gold trend.
The market has major differences on the subsequent trend of gold prices.
CICC analyst financial engineering analyst Ding Luming said that the risk aversion sentiment in the geopolitical pattern is expected to remain stable. Although it has not been reflected in the data in the short term, the recession is on the way. After the missed commodity attributes in the short term, gold ushered in a good opportunity to allocate. It is expected that after the pace of tightening slowed down in the second half of the year, gold is expected to further rise to US$2,000 at the end of last year.
Goldman Sachs Commodity analyst Mikhail Sprogis also said in his latest report that a slowdown in inflation can shift the market focus from continuous tightening to recession risk, which will weaken the downward pressure on gold prices by the continued rise in the US dollar and interest rates. If funds change from stock market to bond market, gold will "shine again".
World Gold Association Bearish gold future trend. The agency believes that gold prices face complex challenges in the second half of this year. The rise in the US dollar, the central bank's interest rate hikes, and geopolitical uncertainty may constitute adverse factors to gold prices in the second half of this year.
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