CICC reported on January 20 , on Wednesday (January 20), the price of international spot gold was trading around US$1,092/ounce, up more than 0.4% from the previous day's closing price of US$1,087/ounce, as the general decline in Asian stocks in the morning rekindled the market's risk aversion sentiment, supporting the gold price to resume its upward trend.
Asian stock markets were generally under pressure early on Wednesday. Short-term Reuters survey data released earlier showed that Japan's manufacturing industry declined in January, coupled with the rise in the round-country market, suppressing Nikkei's 1.7% drop to 16,759.
Other countries' stock indexes also followed the decline, with South Korea's stock market falling 1% to 1,870. Australia's 200 fell at least 0.2% repeatedly to 4,891. Taiwan's weighted index turned three consecutive rebounds to 7,802, down nearly 0.7%.
Hong Kong stock market continued to fall, with the Hang Seng Index falling to 3.25%, falling below 19,000 points, hitting a new low forty months. The Hong Kong dollar exchange rate also suffered a heavy blow. The Hong Kong dollar fell to 7.8228 against the US dollar in the early trading, hitting a new low since 2007, further approaching the guaranteed level of the weak side exchange in the 7.75-7.85 Hong Kong dollar range.
A shares were also unable to survive in the early trading. So far, the Shanghai Composite Index has expanded to 1.2%, the Shenzhen Component Index fell 0.62%, and the ChiNext Index fell 0.9%. The day before, the Shanghai Composite Index rose more than 3%, which was once interpreted by the outside world as the clarion call for a bottoming out rebound.
In the early trading, the general decline in Asian stocks was mainly dragged down by the overnight IMF lowering global economic growth expectations. The International Monetary Fund (IMF) on Tuesday lowered its global economic growth forecast for 2016 as it expects multiple factors to drag global economic growth.
In its 2016 global economic outlook report, the organization said that the global economic growth rate in 2016 is expected to be 3.4%, lower than the previous 3.6% forecast, but higher than the 2015 global economic growth forecast of 3.1%.
The organization also lowered its 2017 growth rate forecast from 3.8% to 3.6%; and maintained its 2016 and 2017 economic growth rate forecast unchanged at 6.3%.
The organization said, "The pace of recovery in global economic activity is expected to be slower than expected in its 2015 Global Economic Outlook Report, especially in emerging markets and developing countries."
IMF also stated that the slowdown in emerging market economic growth (especially in China), continued decline in commodity prices, and rising Federal Reserve interest rates all pose a threat to global growth.
Data released by the National Bureau of Statistics of China on Tuesday showed that GDP grew by 6.9% in 2015, the 25-year low since 1990. GDP grew by 6.8% year-on-year in the fourth quarter of 2015, in line with the market's original estimates, setting a new low since the first quarter of 2009.
On Tuesday morning, China's GDP growth slowed to a 25-year low and once supported the rise of gold prices, as the significant slowdown in economic growth further increased the outside world's concerns about the world's second largest economy, which prompted the recent sensitive risk aversion to heat up.
However, as the Chinese stock market rose sharply in the afternoon and boosted the subsequent European stock markets, the risk appetite also increased, causing gold prices to rise and fall, and the late trading session turned slightly down nearly 0.2%, reported around $1,087 per ounce.
At present, gold market investors' concerns about the Fed's rate hike again have been left behind, as the weak series of U.S. data released last Friday significantly lowered the Fed's expectations for a rate hike in March this year.
On Tuesday, data released by the American Housing Builders Association showed that the U.S. NAHB housing price index fell to 60 in January, with analysts' estimates of 61 and 60 after correction in December.
However, given that the prospect of long-term recovery of the US economy has not changed, the expectation of interest rate hikes is expected to continue to put pressure on gold prices in the future, just like in 2015.
In terms of market sentiment, with the strong performance of gold prices since the beginning of the year, all parties have gradually returned to the gold market. Bloomberg's latest monitoring data shows that nearly US$1 billion of funds have recently flowed back into gold ETFs.
Bloomberg analyst Eric Balchunas said that although the inflow of $1 billion is not too much, it is already very good compared to the level of gold ETF inflows in the past three years.
Regarding the recent trend of gold prices, Jens Pedersen, senior analyst at Danske Bank, said, "As long as the market has doubts about whether China can maintain interest rate policies and how to interfere with the stock market, there will be a demand for safe-haven to drive gold prices."
Citi believes that the rise in gold prices supported by the attractiveness of safe-haven will support gold prices in the first quarter of 2016.In a report on Tuesday, the bank raised its previous average gold forecast for 2016 from $995 per ounce to $1,070 per ounce.
Citi raised its gold price expectations, while another big short Dutch Bank has always maintained a short gold price view. Georgette Boele, a foreign exchange and precious metals analyst at the bank, said: "The response of gold at the beginning of the year has been very strong in the past five years, but by the third week of January, this trend will usually end."
Dutch Bank believes that the Federal Reserve's interest rate hike that suppressed gold for the whole year last year is still there. It is expected that by the end of this year, gold prices will fall to $900 per ounce due to the strong US dollar and U.S. bond yields.
China Gold Network Market Center data shows that as of 11:38 Beijing time, spot gold was US$1,092.59 per ounce, up 0.50%.
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