Securities Times reporter Yan Cui
On February 24, global stock markets plunged due to the intensified conflict in Russia and Ukraine that day.
Due to the triggering of circuit breaker restrictions, the ruble and stock trading on the Moscow Stock Exchange was suspended, and risk aversion triggered the commodity market, and Brent crude oil exceeded the $100 mark.
As of press time, spot gold has reached $1,974.27 per ounce, hitting a record high of more than a year since the beginning of 2021.
Previously, on February 22, spot gold touched $1,914.08 per ounce, a new high since June 1, 2021.
Against the backdrop of record high gold prices, as China's largest jewelry trading market, what is the situation of Shuibei International Jewelry Trading Center in Luohu District, Shenzhen?
Yesterday afternoon, a reporter from Securities Times · e company visited the Shuibei International Jewelry Trading Center and found that although the Shuibei International Jewelry Trading Center was still under the double unfavorable factors of the new crown pneumonia epidemic and the "cold spring" weather, the flow of people in the venue was still endless. Absolutely, some gold shops even reproduced the grand occasion of customers lining up to pay during the gold bull market.
Will the gold price continue to rise in the future?
When will it peak?
The opinion of Shuibei Gold Boss is simple and straightforward: "Whether it will rise or not, it will depend on the interpretation of the situation in Russia and Ukraine!"
Two factors drive gold prices to new highs
Recently, the relationship between Russia and Ukraine has continued to be tense. The two sides have deployed a large number of military personnel and weapons in the border areas of the two countries. As the situation in Russia and Ukraine continues to escalate and conflicts intensify, gold prices have repeatedly hit new highs.
On February 21, the situation in Russia and Ukraine escalated, and the Udong Donetsk civilian armed forces declared a state of emergency in the Donetsk region. This situation continued to increase the risk aversion in the market.
On the evening of February 21, international spot gold broke through a new high of $1,900 an ounce.
In early trading on February 22, the spot gold price reached a maximum of $1,914 per ounce, a new high in more than eight months.
After a brief correction of spot gold in the following trading day, the price of spot gold continued its previous rise on February 24.
On the morning of February 24, the border conflict between Russia and Ukraine intensified, and the whole of Ukraine will enter a state of war.
Affected by this, the global risk aversion mood instantly heated up, the global stock market plummeted, crude oil soared, and the price of gold soared. As of press time, spot gold reached a maximum of US$1,974.27 per ounce on that day, setting a record high for more than a year since the beginning of 2021.
The reporter's statistics found that the price of $1974.27 per ounce has risen by 9.6% as a whole compared to the closing price of $1801.63 per ounce on January 3, 2022.
During the same period, the Shanghai Composite Index fell by 5.76% year-to-date, and the Shenzhen Component Index fell by 10.80% year-to-date.
Historically, the spot gold price hit an all-time high of $2,063 per ounce in August 2020. In the past year, the high of spot gold appeared on June 1, 2021, at $1,914.08 per ounce.
On February 24, the price of physical gold of mainstream brands in the domestic market has generally exceeded 500 yuan/gram, of which Laomiao is quoted at 505 yuan/gram, Chow Tai Fook, Luk Fook Jewellery, Lao Fengxiang are quoted at 503 yuan/gram, Chow Sang Sang and Saturday Fortune are quoted at 501 yuan /gram.
Liang Haiming, dean of the Silk Road Zhigu Research Institute of Hainan University, told a reporter from Securities Times e Company that the recent record high gold price is due to geopolitical factors that have lingered global geo-risks. Investors need to switch to buying gold in order to avoid risks. push the price of gold up.
Second is the factor of international oil prices. When oil prices continue to rise, investors will worry that inflation will follow.
When investors' inflation expectations heat up, they usually buy gold to combat high inflation, thereby boosting the price of gold.
"In the short term, there are two main factors for this round of gold price rise: one is the situation in Russia and Ukraine, and the other is that global inflation continues to rise." Qin Yuan, a special researcher of the Kan Understand Research Institute, said in an interview with a reporter from Securities Times·e Company .
There is a gold shop in Shuibei, and the queue reappears
Shuibei is an important jewelry market with a prominent position in the domestic industry. Through the situation of the Shuibei International Jewelry Trading Center, the outside world can perceive the industry's coldness and warmth.
So under the background of the continued surge in gold prices, how is the situation at the Shuibei International Jewelry Trading Center?
Yesterday afternoon, when the epidemic situation in Shenzhen was severe, the city's epidemic prevention and control was strictly controlled. It took 48 hours for nucleic acid test results to enter and exit the community and shopping malls, which restricted the flow of some people going out. At the same time, the weather was relatively cold, but these failed to stop people from picking gold.
Although the flow of people in the Shuibei International Jewelry Trading Center was not as high that day, it was still in an endless stream. There were many customers who came to buy and consult gold.
At the entrance of Wanshan Commercial Center in Shuibei, a reporter from Securities Times saw that people who came to pick gold were showing the latest nucleic acid test results and queuing up to enter the venue in an orderly manner according to the requirements of epidemic prevention. In the commercial center, customers and merchants frequently interacted and communicated. The scene, the figure of the staff carefully processing the gold jewelry, the picture of some gold shop customers queuing to pay the bill, and the busy express packing of the merchants quietly gathered a quiet but busy scene in the industry.
It is worth mentioning that in some gold stores, the reporter saw many people queuing up to pay the bill, and on the other side of the gold store, there are many customers who are consulting in the store to buy gold.
Perhaps due to the busy business and the wholesale nature of the gold stores they operate, a small number of stores show that they mainly focus on receiving wholesale customers, and they only respond briefly to retail customers.
The reporter saw in a gold wholesale gold store that a list of its designated suppliers was prominently hung on the wall, including nearly 20 brands such as China Gold, Saturday Fortune, Zhou Dasheng, Laomiao, and Jindafu.
The clerk told reporters that the store has been supplying gold and jewelry stores of some mainstream brands in China for many years. Brand stores usually go to their gold store to select samples first, and then process them. Brand owners earn the middle price difference.
Interestingly, the rising price of gold also affects the net worth of Shuibei gold bosses.
Take the global gold price in 2020 as an example. At that time, the domestic gold price of raw materials reached 460 yuan per gram, and the 1000g gold bar rose from 250,000 yuan to 460,000 yuan. Many bosses who hoarded gold were worth more than 100 million yuan overnight.
"The number of customers buying gold bars has increased significantly recently, because it has investment value, and at the same time, the number of customers buying gold jewelry has also increased significantly." The gold boss of Shuibei said with a smile, as if from the smiles of these bosses, they can perceive their net worth rising. fall.
The post-90s and post-00s also love gold
A glimpse of the leopard in the tube, Shuibei is only the wind vane of the industry.
In fact, gold consumption has increased globally, nationally, and elsewhere outside Shenzhen, and gold is gaining popularity again.
According to data from the World Gold Council, the total global gold demand in 2021 will reach 4,021 tons, a year-on-year increase of 10%.
Among them, the consumption of gold jewelry reached 2,124 tons, a year-on-year increase of 52%, and the consumption of gold bars and coins was 1,180 tons, a year-on-year increase of 31%.
Domestically, data from the National Bureau of Statistics shows that China’s overall demand for gold in 2021 also shows a strong trend. The demand for gold jewelry in the Chinese market will reach 675 tons in the whole year, a year-on-year increase of 63%, which is 6% higher than that in 2019 before the epidemic. .
Gold investment demand in the Chinese market has also grown significantly. The total demand for gold bars and gold coins is as high as 285 tons, an increase of 44% year-on-year and 35% higher than that in 2019.
From the Spring Festival to the Lantern Festival in 2022, China's gold consumption has increased by 12% year-on-year. Ancient gold, hard gold jewelry and investment gold bars are the three most popular categories in the market.
During the Spring Festival, a reporter from the Securities Times saw in some brand gold and jewelry direct-sale stores in Futian District, Shenzhen, that there were many customers at the scene, and many people came to buy gold.
It is understood that since the Spring Festival, Shanghai, Kunming, Beijing, Guangzhou and other places have experienced a boom in the gold consumer market. Among them, from the New Year's Day in 2022 to the present, more than ten large gold stores in Kunming such as China Gold, Chow Tai Fook and Chow Sang Sang have sold gold jewelry. Sales increased by 30%-50%.
More and more young people born in the 90s and 00s like to buy gold.
Tmall data shows that the trend of younger gold consumers is obvious. The growth rate of people aged 18-24 exceeds that of other age groups, and the post-00s have gradually become the main force of "buying gold".
Vipshop’s situation is even worse. Since December 2021, the number of orders for gold jewelry has increased by nearly 80% year-on-year. Among them, the number of gold jewelry orders for the post-80s, post-90s and post-95s has increased by about 72%, 80% and 20% year-on-year respectively. 105%.
The data shows that in the week before Valentine's Day, the sales volume of Vipshop's Shengsheng rose by 460% year-on-year, and the purchase volume from the post-90s generation increased by as much as 472%.
"Young people favor gold, which is related to the fact that jewelry brands have begun to pay attention to young people's aesthetics and that young people like to do vibrato, read Xiaohongshu, etc. In recent years, major brands have taken advantage of the national trend to inject ancient craftsmanship and Chinese elements into gold jewelry. In the design, not only new technologies such as 5G gold, 3D hard gold, ancient gold, enamel baking color, etc. are used, but also a variety of trendy styles and linked cultural creations are introduced, which are carried out through various live broadcast platforms and social platforms. Marketing has attracted a larger part of the young consumer population." A gold practitioner told reporters that gold is becoming a part of more young people's daily wear from a tool of value preservation.
Some young people leave messages on social platforms, and they will never laugh at Chinese aunts who rob gold in the future.
There are also young people who are thankful that they inadvertently bought some gold jewelry years ago.
A lady from Shenzhen told reporters that after the year-end bonus was issued a year ago, she watched the live broadcast of gold jewelry on the live broadcast, so she decisively bought a gold bracelet and other gifts to reward herself for the upcoming year, and bought a gold bracelet as a New Year gift for her parents and sisters by the way. , Who would have expected that now that the price of gold is rising continuously, her inadvertent move at the time was still "making money". She believed that buying gold, whether for personal use or as a gift, would not be wasted, and it looked generous and decent.
China Gold executives have previously been surveyed by a number of institutions, saying that the increase in the popularity of the gold jewelry market and the approaching Spring Festival have contributed to the high prosperity of the gold jewelry market. From the beginning of the year to the Spring Festival, the company's operation has been affected by the festival compared with the previous quarter. Significantly improved, the company is optimistic about gold for a long time, and short-term fluctuations in gold prices are normal. In the future, the company will continue to upgrade products according to market demand, and at the same time strengthen cooperation with museums to develop IP products to meet consumer demand.
Market outlook is easy to rise but difficult to fall
How long will this round of gold price rises last, and how much room for the market to rise is the focus of attention from all walks of life.
On February 22, Western Securities released a research report pointing out that due to the double boost of supply and demand after the epidemic, market demand has returned to normal, and gold consumption has started a recovery cycle; Chris Vermeulen, chief market strategist at TheTechnicalTraders.com, said, "The international market is entering a very important period. The precious metals super cycle does not rule out the possibility of gold prices hitting a new all-time high.”
"Many people expect that the international gold price will rise above the historical high of US$2,060 this year, but I estimate that it may only rise to between US$1,880 and US$2,000 per ounce." Liang Haiming told reporters that his judgment was mainly based on three factors. The first is that bank interest rate hikes make gold less attractive as an investment.
Countries around the world, especially in Europe and the United States, have entered or will enter a cycle of raising interest rates.
Since holding gold can’t get interest income, but you can get interest income if you put money in the bank. When European and American banks raise interest rates, investors are more willing to put money in the bank, which reduces the demand for gold and causes the price of gold to drop. .
Second, with the rise in the dollar exchange rate this year, there is downward pressure on gold prices.
Liang Haiming explained that the interest rate hike by the Federal Reserve has an upward impetus for the exchange rate of the US dollar. Gold and the US dollar have a negative correlation. Since gold is priced in US dollars, if the US dollar appreciates, the price of gold will become more expensive for investors who use other currencies. This inhibits consumption, causing the price of gold to fall.
The third factor is that as the new crown pneumonia epidemic gradually subsides, the blockage of the global supply chain will gradually ease this year, and global inflation may peak and fall, thus reducing the need for gold as an anti-inflation.
"In the long run, inflation is a key medium and long-term positive factor for gold. Even if it may face negative pressures such as the Fed raising interest rates in the future, the impact will be limited." Qin Yuan said in an interview with a reporter from Securities Times · e company.
Li Yang, senior gold investment analyst at Beijing Caibai Co., Ltd., said that in 2022, especially from the beginning of the year to the Spring Festival, the price of gold will basically be above US$1,800. With a strong rise, with the future situation, including the landing of this kind of boots, after the Fed's interest rate hike policy is gradually clear, the gold price may experience a process of callback, bottoming, and shock rebound.
Wang Rong, chief researcher of non-ferrous metals and precious metals at Guotai Junan Futures, said in a new article on February 23, “This round of risk aversion still needs to be tracked, and there may also be a short-term correction demand at the technical level, but based on the real interest rate side, gold even if There may not be much room for a callback, and 'easy to rise and difficult to fall' is our latest benchmark for gold's future trend."
Regarding the market outlook, the logic of the owner of the Shuibei Gold Store is simple and straightforward: "It depends on the interpretation of the situation in Russia and Ukraine. After all, it's time to buy gold in troubled times."