Text/Wang Lichen
Since the beginning of the year, gold prices have continued to soar.
The international spot gold price has been rising from US$2,062 per ounce (1 ounce of gold is about 31.1035 grams), and the intraday price reached US$2,184 per ounce on March 12.
At the same time, the retail price of pure gold in China continues to rise, approaching RMB 670 per gram.
On the 12th, domestic brand Chow Sang Sang gold was quoted at 665 yuan per gram, which was at a high level during the year.
What factors have affected the recent strong rise in gold prices?
How will gold prices go in the future?
Multiple factors boost gold prices
In an interview with China News Service, Wan Zhe, a professor at Beijing Normal University and former chief economist of China National Gold Group, believes that this round of gold price rise is mainly driven by two factors.
First, the market’s expectations for an interest rate cut by the Federal Reserve have pushed gold prices higher.
Federal Reserve Chairman Powell said in an interview in early February that the Federal Reserve is expected to implement three interest rate cuts this year, each time by about 25 basis points, and is expected to start cutting interest rates as early as May.
Previously, the market had been betting that the Federal Reserve would cut interest rates six times starting in March.
"At present, it seems that the Federal Reserve will not cut interest rates quickly." Wan Zhe said that U.S. core inflation expectations have rebounded. If interest rates are cut too early, previous efforts to fight inflation will be in vain.
Second, the possible dramatic conflict in the U.S. election will bring great uncertainty and policy risks, and risk aversion will boost gold price fluctuations.
"Although every U.S. presidential election is accompanied by some dramatic plots, the uncertainty of this year's plot may be particularly prominent." Wan Zhe said that the market is speculating whether there will be a particularly dramatic situation this year, which will affect the future direction of U.S. policy. .
In addition, international geopolitical conflicts continue.
Wan Zhe pointed out that multiple regional conflicts may become the norm in the future. These uncertainties have intensified risk aversion and have a certain impact on the rise in gold prices.
Will gold prices continue to rise strongly?
Aakash Doshi, head of North American commodities research at Citibank, expects gold prices to soar to US$3,000 per ounce in the next 12 to 18 months, which is equivalent to nearly 700 yuan per gram.
The most likely factor leading to this situation is the acceleration of de-dollarization by central banks in emerging market economies. As central banks around the world accelerate gold purchases, gold purchases may double.
"The price of gold is currently at a high level, and any special event may push up the price of gold again." Wan Zhe said that at present, it is inevitable that the price of gold will remain at a high level and fluctuate for a period of time.
Feng Lin, director of the Research and Development Department of Oriental Jincheng, said in an interview with China News Service: Looking forward to the future, with the Federal Reserve’s imminent interest rate cut, the U.S. dollar index is stable and weakening, and the domestic people’s relatively strong demand for gold purchases needs to be further released. In the short term, Domestic international gold prices will still run at a high level, and the possibility of reaching new highs cannot be ruled out.
Zhou Zhicheng, a precious metals researcher at Guantong Futures, believes that the current market expected interest rate cut time is increasingly leaning towards June, and the value of the U.S. dollar itself is falling. Under the circumstances of the U.S. government's high debt, the prevalence of credit depreciation transactions, the turmoil in the election year, and the very uneasy international situation , the possibility that international gold prices will continue to rise and continue to create new historical highs is very high.