Reporter Han Yu
On the hot search list in 2023, topics about the high price of gold have repeatedly appeared: "gold prices have reached a new high", "young people are beginning to be keen to buy gold", "global central banks are hoarding gold"... At the end of the year, gold, whose prices remained high, remained hot during the traditional peak consumption season. According to a CCTV News report on December 12, whether it is a first- or second-tier city, or a third- or fourth-tier city, gold consumption is a hot scene.
Recently, the "Securities Daily" reporter visited the Caibai jewelry head office of Beijing Caishikou Department Store Co., Ltd. located in Xicheng District, Beijing, and found that although the gold price is still high, the gold jewelry sales area on the first floor is crowded, and consumers are enthusiastic about buying gold. At the same time, the sales staff of many gold jewellery brands also frequently display new products of their own brands on WeChat Moments, including related products such as "Natal Year" and "National Tide Style".
In addition to first- and second-tier cities, consumers in third- and fourth-tier cities are also experiencing a hot demand for gold. "On this year's National Day, my child bought me a gold bracelet, and it is almost the New Year, thinking that many merchants have promotion plans, and I want to add some gold goods." A woman surnamed Liu, who lives in a small county town in the north, told reporters that buying gold jewelry is also a good investment.
Gold prices rose by more than 13% during the year
In fact, gold has both the role of consumer goods and investment, and the interaction of the two roles determines the performance of gold. Overall, gold is not only affected by investment flows, but also by jewellery and technology processing, as well as global central bank demand.
So, how has the gold price performed this year? From the perspective of international gold futures prices, on December 12, the COMEX gold futures price broke through the $4,2100 / ounce mark and reached a record high of $2152,3.12 / ounce. From the perspective of the whole year, as of December 22 this year, the cumulative price of COMEX gold futures has increased by about 13.05%. If we count from November last year, the starting point of the current round of gold price rally, the COMEX gold futures price has risen by 11.12% as of December 22.
"Gold's performance in 2023 can be described as 'resilient', except for the technical pullback, the overall continuation of the strong upward style." Liu Siyuan, chief analyst of Lingxiu Finance, said in an interview with the "Securities Daily" reporter that from a fundamental point of view, the Federal Reserve's monetary policy, international geopolitical conflicts and central banks' continuous purchase of spot gold are the main influencing factors. For example, the international geopolitical conflict that emerged in early October this year triggered a rapid rebound in gold from short-term lows.
As Liu Siyuan said, 2023 will also be a year for global central banks to buy gold aggressively. According to information released by the World Gold Council on December 12, recently, the World Gold Council's global research head An Kai said that in the first three quarters of 15, global gold demand remained stable and exceeded the average of the past decade, mainly due to the net purchase of central banks and the development of jewelry manufacturing. According to the results of the 2023 Global Central Bank Gold Reserves Survey, more than 2023% of the central banks surveyed expect global gold reserves to increase in the next 70 months.
"Overall, global central banks and official institutions have doubled demand for gold purchases compared to the long-term average, which has brought important structural changes to the gold market." Inflation, geopolitical risks, and the multipolarity of the global reserve currency system have driven the trend of central banks buying gold, which may continue for years or even decades, and is expected to further support gold's performance, Ankai said.
How will gold prices go next year?
For the performance of gold prices next year, the interviewed experts generally expressed optimism. Liu Siyuan said: "It is expected that gold will be a 'small bull market' in 2024, and it may face a decline or strong shock after the rise. ”
He further analyzed that the inflection point of gold prices is mostly ahead of the turning point of the interest rate cycle, so in December, although Fed Chairman Powell only said that the future or interest rate cuts, the market has been treated as interest rate cuts, and gold prices have directly risen to record highs. The Federal Reserve, which is facing huge debt pressure, is expected to start a cycle of interest rate cuts between March and May 12. Therefore, gold is likely to remain hot at the beginning of 2024 and hit new highs with the help of the Fed's interest rate cut. However, after actually entering the interest rate cut cycle in the second half of next year, the overdrawn gold price is likely to see a correction.
"With the current Fed tightening cycle nearing its end, gold is expected to perform relatively well in 2024." Yuan Shuai, executive vice president of the Institute for the Promotion of Agriculture, Culture and Tourism Industry, told the Securities Daily that with the gradual normalization of the Federal Reserve's monetary policy, the risk-free interest rate in the market may fall, which will form a certain support for non-yield assets such as gold. At the same time, if there is a risk of a "recession" in the US economy in the future, or if international geopolitical tensions escalate, gold may play its safe-haven properties and attract more investors.
From the perspective of investors, Liu Siyuan reminded that gold price changes ahead of policy changes, next year before the Federal Reserve rate cut and the early stage of the interest rate cut gold still has a "small bull market" opportunity, investors can continue to pay attention to the opportunity of the pullback layout, but need to beware of excessive overdraft after the rise of technical adjustment, control the position and cash out profits in a timely manner. (Securities Daily)