The international gold price has reached a new high, will it continue to rise?
China News Service, Beijing, December 12 (Reporter Liu Wenwen) The international gold price continues to "soar". In early trading on December 4, the main price of COMEX gold futures rose sharply at the open, reaching a record high of $12,4.2152 per ounce.
Recently, the international gold price has continued to rise. A number of experts pointed out that there are many reasons behind the continuous rise in gold prices.
"The rise in gold prices some time ago was mainly due to the Palestinian-Israeli conflict." Wan Zhe, a professor at Beijing Normal University and former chief economist of China Gold Group, told China News Service that before the Palestinian-Israeli conflict, gold prices had a slight downward trend. After the Palestinian-Israeli conflict, the intensification of geopolitical tensions has triggered a strong risk aversion in the market, and the rise in gold prices is an inevitable result. Gold prices retreated when the market was expecting a lower chance of a more violent conflict. However, in general, the current Palestinian-Israeli conflict situation is still tense, the geopolitical conflict has not been completely resolved, and gold is still in the stage of geopolitical risk premium.
In addition to geopolitical conflicts, the weakening trend of contraction in financial conditions is also a major factor affecting gold prices.
Zhang Yu, chief macro analyst at Huachuang Securities, pointed out that the Fed's forward expectation of interest rate cuts pushed gold prices to record highs. At present, the market expects the Fed to stop raising interest rates this year, starting to cut interest rates in May 2024, and cutting rates four times next year to 5.4%. This expectation has driven gold prices stronger over the past month.
Wan Zhe also said that on the one hand, the market is worried about whether the U.S. economy will be shocked or even a recession will start a new round; On the other hand, the market has speculation and expectations for the United States to stop raising interest rates and even enter the state of interest rate cuts next year. In this context, the dollar index is also weakening, so the rise in gold prices is also affected by changes in financial conditions.
In addition, the continued "binge" of gold by global central banks is also one of the factors driving gold prices upward.
According to the World Gold Council, global central bank gold demand increased by 2023% year-on-year to a record 14t in the first three quarters of 800. The central bank made 337t of net purchases in Q<>, the third highest quarterly net purchase on record.
Wan Zhe analyzed that the central bank is the "weather vane" of the market. In fact, the central bank's continued gold purchases also indicate that the current market risk aversion and tension have not completely eased under the influence of the geopolitical situation. According to the World Gold Council's latest central bank gold reserves survey, seven out of 10 central banks surveyed expect to increase their gold reserves in the next 12 months, taking into account inflation, geopolitical events, and other factors, and the trend of central bank gold purchases is likely to continue for many years.
Will gold prices continue to soar? Looking ahead, a number of institutions remain bullish on gold prices.
Wang Zhaohua, a researcher at Everbright Securities, believes that the slowdown in U.S. economic growth in 2024 is a high probability event, and 2024 will usher in a U.S. interest rate cut and a weakening dollar, which is good for gold prices and gold stocks, and is optimistic that gold prices will continue to hit new highs.
Caixin Securities Research Report also pointed out that the Fed's current round of interest rate hike cycle may have ended, and U.S. interest rates may usher in a shift after staying at a higher level for a period of time, the U.S. dollar index and U.S. Treasury real yields have fallen, gold prices have rebounded, and gold prices have continued to rise in the medium and long term.
In Wan Zhe's view, the current situation of conflict, tear and confrontation in the world, whether in politics or economy, has not completely disappeared, and the global governance, order and framework are in the process of reorganization. Whether geopolitical conflicts will continue to occur in the future, where and whether the risk points of the global economy and financial markets will recur, these are all issues that the market is concerned about. "Therefore, in the long run, gold prices will have high support for a long time." (ENDS)