In the first half of the year, the return rate of gold assets exceeded 17%, and global gold ETFs had a net inflow for 7 consecutive months. Strong
hedging demand pushed gold prices to a new high.
Economic Daily · China Economic Net reporter Wen Jicong
The international gold price recently broke the $1800 per ounce mark, setting a new high of nearly nine years since September 2011. As of June, global gold ETFs have experienced net inflows for seven consecutive months, setting a historical record. Industry insiders believe that due to the epidemic, market worries continue to ferment, and gold is favored by funds as an important safe-haven asset. In addition, the monetary easing policies adopted by the central banks of many countries have also boosted the price of gold. Subsequent international gold prices are expected to remain high and volatile.
The recent international gold price trend is strong. On July 8, the international gold price closed at US$1808.74 per ounce, breaking through the US$1800 per ounce mark, hitting a high of US$1818.02 per ounce and setting a new high of nearly 9 years since September 2011.
Gold is regarded as an important safe-haven asset. In the first half of the year, gold's return on assets exceeded 17%, which was outstanding among mainstream assets. What is the main logic behind the rise in gold prices? Will gold prices continue to remain high in the future?
Many factors caused the price of gold to rise
Since the beginning of this year, affected by the new coronary pneumonia epidemic, the international financial market has fluctuated. In the first quarter, the international gold price rose first and then declined. In the second quarter, the international gold price picked up again. Industry insiders said that the recent high risk aversion in the market has boosted the gold price to record highs, and the loose currency and the rotating effect of large assets have also brought support to the upward price of gold.
Zhang Qiang, CEO of Huiyan Huiyu Asset Management Company, believes that with the spread of the new coronary pneumonia epidemic worldwide, it has seriously dragged down the global economic recovery, and the market fears caused by it continue to ferment. "The more under the risk event, the more the hedging property of gold can be highlighted, and then boost the price of gold." Zhang Qiang said.
The main reason for the rise in gold prices is currency easing. In the face of the risk of a deep recession in the world economy, central banks in many countries have adopted monetary easing policies to stimulate the economy and release a lot of liquidity into the market. This will lead to the depreciation of paper currency. Under this expectation, more funds flow into gold. The central banks of various countries "open the gates" and the gold market has become the most direct "container".
In addition, the anti-inflation attribute of gold is the basis of this round of rising gold prices. Gold has globally recognized financial attributes and is favored by financial institutions and investors in various countries. With the continuous influx of buying, gold prices have increased.
The rotation effect of large-scale assets has also brought important support to the performance of gold prices. Senior Investment Analyst Xiao Lei said that the rotation effect of large-scale assets has driven gold prices. In recent years, major assets in major global markets, including US stocks, have reached new highs, but gold has performed generally in the past few years, which has led to gold being in a "depression" in the valuation of major assets, once the market begins When there is a rotation, the attention of gold will increase.
Zhang Qiang believes that this round of rising gold prices is under the pessimistic expectation of the future economy of major Western economies such as the United States. "As the locomotive of the global economy, the United States has not played a leading role in this epidemic. The vaccine research and development that is highly hoped by the market will take time. In the short term, the market's concerns about the economy will continue and the epidemic will Without effective control, it is difficult to say that the economy is recovering, the trend of safe-haven funds flowing into the gold market remains unchanged, and the rise in gold prices is expected to continue." Zhang Qiang said.
Or will remain high
Gold has become one of the few strong assets under the epidemic, and the more funds gathered, the higher the price of gold will be. The international gold price trend has continuously created new highs, how will the subsequent market be interpreted?
Judging from the market's risk aversion sentiment, gold's attention is still on the rise, and the upward trend is expected to continue. "As far as the current general environment is concerned, before the epidemic is effectively controlled, market concerns are difficult to cool down, the hedging effect of gold prices is gradually highlighted, and the bullish trend of gold prices will continue." Research Center for Corporate Governance and Information Disclosure, Beijing Institute of Technology Director Zhang Yongji said.
From the perspective of market capital flow, gold ETF funds maintain a net buying status, and market institutions and individual investors have increased their investment in gold. In Zhang Qiang's view, a large amount of funds gathered for the purpose of resisting currency devaluation or economic downside risks will increase the volatility of gold, and the price of gold will remain high and volatile along the upward trajectory. As gold prices continue to hit new highs, they will also attract more capital attention.
However, Chen Ming, Chief Analyst of First-hand Gold, believes that the gold market continues to reach new highs. From the perspective of the daily structure of the market, there is always no heavy volume in the market, which means that the gold market has not stopped in the short term, but pay attention to the follow-up In the short-term adjustment, gold may be affected by the rise of the US dollar and risk assets in the near future, and the high-level heavy adjustment leads to a callback; however, due to the macroscopic characteristics of gold, it is expected that the price of gold will continue to fluctuate at a high level, and the probability of a short-term high rise and fall Larger, the overall will remain volatile.
Investment risk is worth alerting
The latest report released by the World Gold Council shows that as of June this year, global gold ETFs have experienced net inflows for seven consecutive months, setting a historical record. In the first half of this year, the total size of global gold ETFs increased by 25%. As an investor, what are the risks of investing in gold now need to be vigilant?
"Investors should not chase more high." Zhang Qiang said that while seeing the benefits, investors also need to remind investors to pay attention to the risks brought by gold price fluctuations. Even if the gold price is in the upward channel, there will be a pullback. Investors are advised to buy when the gold price pulls back.
It is worth noting that many gold trading objects are leveraged, and seemingly unremarkable fluctuations may cause greater losses to investors, so investors need to understand the leverage multiple of their trading varieties before entering the market. Risk control in advance. For ordinary investors, try to choose gold varieties without leverage; for relatively professional investors, it is necessary to control the proportion of positions and do risk control within a tolerable range.
"The current price of gold is relatively high, and the strength of each upward breakthrough is relatively weak. It is not recommended to chase more high, but it is still optimistic about the trend of gold for a long time." Chen Ming said.
For example, the paper gold purchase and redemption methods of banks are very convenient and low in cost, without leverage, which can avoid unnecessary price fluctuation risks, suitable for ordinary investors with low risk appetite. "As a long-term fund without leverage, it will be a good time to buy gold for a period of time. The lower the cost of holding a position, the better. The smaller the impact of price fluctuations on investor sentiment, the more favorable it is for investors to hold for a long time." Zhang Qiang said.
For relatively professional investors, due to too many factors affecting the price of gold, as the degree of attention increases, the amplitude of gold price fluctuations will also increase, and risk control is more important than investment income.
In addition, investors need to be aware of asset portfolios, rather than "betting" on certain types of assets. Xiao Lei believes that in order to hedge the depreciation of the US dollar and the stagflation risk of the US market, some gold can be bought; while the Chinese market recovers faster, its stock market may be more dazzling. Investors can choose to buy multiple assets to combine. For ordinary investors, no matter which investment target they choose, they still need to keep enough cash in hand to prepare for emergency needs.