It is worth mentioning that although the demand for gold from central banks around the world is still stable, there are signs of slowing down. In September and October 2019, the total net purchases of central banks decreased on a month on month basis.
Xu Yaxin, vice president of fx168 School of Finance and economics, said in an interview with the daily economic news that gold has the geopolitical function of hedging. Global financial markets are still facing many uncertainties, such as the economic recession, presidential election, such as the recent conflict between the United States and Iran in the Middle East, which directly lead to a surge in short-term gold prices.
He further pointed out: looking forward to 2020, the gold peak area is expected to have an opportunity to hit US $1650-1700 / oz. From the perspective of gold investment, physical gold is more suitable for household asset allocation, generally recommended within 5% of their current assets.
Up and up! Gold price reached a new high in nearly seven years, and gold concept stocks rose sharply
Zhang Juntao, a senior analyst of Industrial Research on exchange rate commodities, believes that on the surface, the rise of gold price was caused by the beheading action of the United States against Sulaimani, which made the geopolitical situation in the Middle East suddenly tense. On the other hand, from the perspective of large-scale assets, the inventory cycle of the United States entered the stage of passive destocking, during which gold was mainly affected by the prices of U.S. Treasury bonds and commodities.
This round of increase is mainly affected by the double positive effects of the decline of US Treasury bond yield and the rise of crude oil price. In fact, the markets risk appetite has reached a very high level before, facing the risk of mood adjustment, but the beheading action of the United States accelerated the arrival of the adjustment, and also increased the rise of gold.
As an important hedging tool, when the uncertainty of macro environment rises significantly, gold has the characteristics of preserving and increasing value, so the price will rise. From the current international situation, on January 3, the U.S. air raid on Baghdad International Airport, the capital of Iraq, intensified tensions in the Middle East and continued to heat up the risk aversion mood.
On the other hand, the US ism manufacturing PMI in December was 47.2, the lowest since June 2009, lower than market expectations. Meanwhile, the dollar index fell sharply in the day, supporting the rise of spot gold prices. Citic securities mentioned in the research report that the factors of gold price rising also include: the US dollar index and real interest rate both hit new lows in the near future, and the fundamentals support gold price rising; the economic expectation is weak under the guidance of the US leading data, the stock market is at a ten-year high, and the rising risk aversion mood is expected to significantly affect gold price; under the situation of domestic implementation of reducing reserve to release liquidity, and the spread of global negative interest rate, Gold investment demand rose, etc.
According to fan Ruoying, a researcher at the Research Institute of the Bank of China, the main reasons for this round of gold price rise are as follows: first, the momentum of global economic growth has weakened, the economic performance of major economies has not been as expected, and the uncertainty of the situation has increased, which has led to the rising demand for risk aversion. As a hedging tool, gold is often sought after when the risk aversion mood is rising, which drives the gold price to rise significantly. Second, the global monetary policy has changed. The Federal Reserve has cut interest rates for many times. The global interest rate trend is declining, which will increase the attractiveness of gold. Third, the current trend of central bank de dollarization is obvious, gold is an important reserve asset. Considering the diversification of foreign exchange reserves, many central banks increased their holdings of gold, which also gave strong support to the gold price.
It is worth mentioning that, driven by spot gold price, gold concept stocks rose sharply. As of January 7, Ronghua industry, Chifeng gold, humon shares, Yuancheng gold, etc. fell on the basis of the previous trading days big gains.
Some analysts have pointed out that gold, as an important hedging tool, will continue to gain momentum no matter whether the escalation of the situation in the Middle East brings a rising risk aversion mood, or whether the Federal Reserve recognizes that the US economy has entered an adverse cycle of interest rate reduction after the marginal weakness.
Xu Yaxin told the daily economic news that looking forward to the trend of gold in 2020, it is likely to usher in a bull market. Judging from the rhythm, it is expected that the price will rise from January to February, fall back from March to may, rise again from June to August and possibly rise all year round. Finally, it will fall back from September to December. The high point area is expected to have an opportunity to hit 1650-1700 US dollars / ounce , the low for the whole year may be in the region of 1380-1400 USD / oz.
Buy whatever you want! Dont follow the trend, wait patiently for the chance to enter
At present, gold prices are rising all the way. Is gold still worth buying? When is the best time to start?
Unlike bonds, gold does not pay interest or dividends because it has no credit risk, the World Gold Association says. This sense of lack of revenue will deter some investors. But in such an environment, a quarter of sovereign debt in developed markets is traded at negative nominal interest rates, and once inflation is adjusted, up to 70% of transactions will be conducted at real negative interest rates, and the opportunity cost of gold almost disappears, even providing visible opportunities.
Gold has historically performed well in the year after the Fed moved from tightening to shelving or loosening policy. In addition, when the real interest rate is negative, the annual return rate of gold in history is twice the long-term average level, namely 15.3%. Even a lower positive real interest rate produces a higher average return. In fact, gold returns are negative only at a time when real interest rates are significantly higher.
According to the securities strategy team of CSCI, as a special commodity, gold has multiple attributes of commodity, currency and investment hedging. Global geopolitical risks and anti globalization process are rising, and risk factors also drive gold prices up. It is suggested that investors should allocate more gold at present to grasp the investment opportunities brought by interest rate reduction and geopolitical risks rising in overseas markets.
In this case, what will happen to gold in the future? How to equip gold assets?
Zhang Juntao suggested: it is expected that gold will still perform well this year, and individual investors can participate in the market by gold ETF, paper gold, gold T + D and other ways. But we need to pay attention to two points: first, we must not chase the rise and kill the fall. After the rapid rise of this round, gold will have a certain degree of adjustment, and we can wait patiently for new entry opportunities. Second, there will be ups and downs in the trend of gold price throughout the year, and it will not rise smoothly. Investors should be prepared psychologically.
Xu Yaxin also said that from the perspective of gold investment, physical gold is more suitable for household asset allocation, generally recommended within 5% of their current assets. Investors with higher risk appetite can choose bank account gold investment to obtain higher investment income. As for the relatively professional investors, they can pay attention to the gold deferred products (leverage) and enjoy the excess return in the bull market of gold.
Grab and rob! The central banks of many countries have increased their holdings intensively, with four purchasing funds reaching the level of 100 tons
In fact, gold is not only the best choice for individuals to avoid risks, but also more and more favored by central banks in recent years.
So, in the global central banks collective buy buy gold buying activities, who is the master chopper? According to the data released by the world gold association, by the end of October 2019, Turkey, Russia, Poland and China had purchased about 100 tons of gold in October 2019, with specific data of 144.7 tons, 139.07 tons, 99.97 tons and 95.79 tons respectively.
However, although central banks demand for gold is still stable, signs of slowing down have emerged. In October, the total net purchase amount of central banks reached 41.8 tons, showing a steady performance, but still 16% less than the total purchase amount in September (49.6 tons), while the total purchase amount in September (49.6 tons) was 16% less than that in August (59 tons).
In fact, this situation can be seen from the change of gold reserves in China in the past year. Data shows that since December 2018, Chinas central bank has been increasing its holdings of gold until the end of September, October and November 2019 at 62.64 million ounces. Specifically, the gold reserves in November December 2018 and January December 2019 are 59.24 million ounces, 59.56 million ounces, 59.94 million ounces, 60.26 million ounces, 60.12 million ounces, 61.61 million ounces, 61.94 million ounces, 62.26 million ounces, 62.45 million ounces, 62.64 million ounces, 62.64 million ounces and 62.64 million ounces respectively.
The world gold association said that the growth of central bank gold demand is closely related to the current geopolitical and economic situation and important structural changes in the global economy. Gold is not only a liquidity counter cyclical asset, but also a long-term value storage tool. Therefore, it can help central banks to achieve their core objectives of ensuring security, liquidity and return.
The 2019 central bank gold reserve (cbgr) survey shows that the central banks demand for gold continues to be strong in the short and medium term. 8% of central banks expect to increase gold holdings in the next 12 months. Central banks in emerging markets and developing economies account for a higher proportion, with 11% expected to increase their gold holdings, while most central banks do not expect their gold holdings to change. In response, Zhang Juntao said in an interview with the daily economic news that the central banks of emerging economies, mainly represented by the central banks of China, Russia and India, are likely to continue to increase their holdings of gold, which is mainly due to the consideration of de dollarization. Since the United States set off global trade frictions, the dollars position as a global standard currency has been increasingly shaken. Emerging economies need to find a new anchor of value stability for their currencies, and improve the gold content and global recognition of currencies. The enthusiasm of central banks in developed economies to increase gold holdings is not high, while the ECB and the BoJ are reducing gold holdings instead, which is related to the high international recognition of the euro and the yen. Source: editor in charge of daily economic news: Yang bin_nf4368
The 2019 central bank gold reserve (cbgr) survey shows that the central banks demand for gold continues to be strong in the short and medium term. 8% of central banks expect to increase gold holdings in the next 12 months. Central banks in emerging markets and developing economies account for a higher proportion, with 11% expected to increase their gold holdings, while most central banks do not expect their gold holdings to change.
In response, Zhang Juntao said in an interview with the daily economic news that the central banks of emerging economies, mainly represented by the central banks of China, Russia and India, are likely to continue to increase their holdings of gold, which is mainly due to the consideration of de dollarization. Since the United States set off global trade frictions, the dollars position as a global standard currency has been increasingly shaken. Emerging economies need to find a new anchor of value stability for their currencies, and improve the gold content and global recognition of currencies. The enthusiasm of central banks in developed economies to increase gold holdings is not high, while the ECB and the BoJ are reducing gold holdings instead, which is related to the high international recognition of the euro and the yen.