China News Network, May 5 (Zhongxin Finance Gong Hongyu) Gold prices, which have been rising for several months, continue to rise! On May 7, the international gold spot price once rushed to 5.4 US dollars / ounce, setting a new historical record. COMEX gold futures also rose intraday to $2079,67.2085, approaching an all-time high.
"The more you wait, the more expensive it is, the more expensive you want to buy." When the price of gold "soars", the market's enthusiasm for gold continues unabated. A number of experts said that gold prices are strong and there is still a lot of room for growth during the year. Should I buy gold now?
COMEX Gold price action in 2023.
Risk aversion accumulates and the "hoarding fever" heats up
At the beginning of 2023, the trend of gold was sluggish for a while. Silicon Valley banks suddenly collapsed in March, after which gold prices turned into a soaring track. Data show that the COMEX gold price rose from $3.3 / oz on March 8 to $1818.1 / oz on May 5, an increase of more than 4%.
The recent trend in gold prices has been even more violent. On May 5, COMEX gold traded at $4,2085.40 intraday, just one step away from its all-time high.
Wang Youxin, a senior researcher at the Bank of China Research Institute, said in an interview with Zhongxin Finance that gold's recent surge was mainly driven by rising risk aversion under the financial system and the risk of recession.
On May 5, First Republic Bank was closed by the California Financial Protection and Innovation Agency and taken over by the Federal Savings Insurance Corporation, the banking regulator. This is the third U.S. regional bank to be closed in two months, after Silicon Valley Bank and Signature Bank.
"This shows that under the influence of tightening monetary policy, the liquidity risk of the US banking industry is still evolving, and there is a possibility that the risk will continue to spread and spread, resulting in increased risk aversion." Wang Youxin said.
On May 5, the Fed announced that it would raise its target range for the federal funds rate by 3 basis points to between 25% and 5.5%.
Wang Youxin believes that under the background of major central banks in Europe and the United States continuing to raise interest rates, the downward pressure on the global economy continues to increase, and the risk of recession increases, which promotes safe-haven funds to flow into the gold market to seek more stable returns.
In addition, Zhou Maohua, macro researcher of the financial market department of China Everbright Bank, also mentioned that some central banks' gold purchases have also boosted investment attractiveness to a certain extent.
According to data released by the World Gold Council, global central bank demand for gold purchases increased sharply in the first quarter, and global official gold reserves increased by 228 tons. Global bar and coin investment rose 5% y-o-y to 302t. In March, People's Bank of China announced an increase of 3 tonnes of gold reserves, bringing the total to 18,2 tonnes.
Consumers "buy more and more" There are gold companies whose net profits have almost doubled
Gold prices and demand in consumer markets are equally hot.
"I waited for the price of gold to fall, but I didn't expect it to get higher and higher." Xiaoyun (pseudonym), who has been watching the price of gold for the past two months, told Zhongxin Finance that taking the gold necklace she just bought this week as an example, if she had bought it two months ago, she could have spent more than 300 yuan less.
Zhongxin Finance noted that on May 5, the price of gold jewelry of a number of gold brands was close to 5 yuan / gram, an increase of several tens of yuan compared with March. Even the salesperson said, "The price of gold is really going crazy."
However, the rising gold price has not dampened consumer enthusiasm. Due to the need for value-preserving investments and concerns about the continued rise in gold prices, many consumers chose to buy gold as soon as possible.
Data released by the China Gold Association also showed that in the first quarter, China's gold market recovered, with gold consumption of 291.58 tons, an increase of 12.03% year-on-year.
It is worth mentioning that when gold is hot, the first quarter earnings report of gold companies can also be described as "sparkling".
For example, Lao Fengxiang achieved operating income of 245.58 billion yuan in the first quarter, a year-on-year increase of 33.17%, and net profit of 7 million yuan, a year-on-year increase of 16.76%; Zhou Taisheng's revenue in the first quarter was 1.41 billion yuan, a year-on-year increase of 22.49%, and the net profit attributable to the parent was 65 million yuan, a year-on-year increase of 3.65%; In the first quarter, China Gold achieved operating income of 26.06 billion yuan, a year-on-year increase of 161.39%, and net profit of 12 million yuan, a year-on-year increase of 33.3%.
Infographic: People buy gold jewelry at shopping malls. Photo by China News Agency reporter Lu Ming
Expected to rise to $2500,<>/speak?
Gold prices continue to rise, has it reached the top, and what will be the follow-up trend?
Wang Youxin believes that from the subsequent market performance, after the rapid rise of gold in the short term, with the concentrated release of risk aversion, short-term gold prices may fall. However, from the rest of the year, gold prices are likely to continue to rise stimulated by recession fears and monetary policy adjustment expectations in developed economies.
According to the CICC research report, gold is expected to record a high increase in 2023. As inflation in the United States falls, it will drive the Fed to slow down the pace of interest rate hikes or even start the interest rate reduction cycle, and real interest rates are expected to continue to fall; Coupled with the current anti-globalization background, the global monetary system is facing profound changes, the purchase demand for gold reserves is systematically rising, gold prices have entered the right upward channel, is expected to hit a record high, even reaching the level of 2300-2500 US dollars / ounce.
Tan Yaling, president of the China Foreign Exchange Investment Research Institute, told the media that the market expects the international gold price to reach a high of $2500,<> this year. The upward momentum of gold prices lies in the depreciation of the US dollar and the Fed's interest rate hike, and the upside potential of gold prices highlights geopolitical factors and economic uncertain risks. (End)