Generally speaking, in the case of rising panic and falling risk preference of investors, equity risk assets are often sold off, and precious metal risk averse assets such as gold will become substitutes to perform strongly. But this time, the situation is different, and the international gold price also plummeted, which is rare.
On February 28 local time, the main contract price of Comex gold futures in the United States closed at US $1587.3/ounce, down 3.36% on that day. This decline is the largest one-day decline in nearly seven years since 2013.
Coincidentally, gold prices in London also showed a similar decline, closing at $1585.63 per ounce, down 3.60% on the day.
At the same time, the yield of US Treasury bonds fell out of the record low.
According to wind data, on February 28, the yield of two-year US bonds fell 15.4 basis points to 0.919%, and the yield of five-year US bonds fell 12.6 basis points to 0.947%, both falling below the 1% threshold for the first time since 2016; the yield of 10-year US bonds fell 11.2 basis points to 1.154%, falling below 1.2%, and the yield of 30-year US bonds fell 8.3 basis points to 1.676%, a record low. The yield on 10-year US Treasuries has fallen nearly 30 basis points this week.
There is no financial asset immune to extreme panic
The sharp drop in US bond yields reflects investors pursuit of safe assets. However, in this context, gold has also been sold off. What is the logic behind the dark moment with the stock market? Will investors long-term belief in gold as a safe haven collapse?
Fu Peng, who just became the chief economist of Northeast Securities, explained to reporters that gold is the real interest rate, and the real interest rate in the general direction sinks and gold rises, but in the micro level, attention should be paid to the speed of the two variables of nominal interest rate and inflation. In the past two days, the global economic expectation has deteriorated substantially, and the inflation expectation has subsided substantially. Although the ten-year period of the nominal interest rate of the US Treasury bond set an unprecedented historical record before the Feds statement, the expectation of the lower range has been restrained by the federal benchmark interest rate, which makes the gold severely shocked.
What is the next node? Its simple. When inflation expectations subside and the dust falls, and the reality of slowing aggregate demand is accepted, central banks start to make clear that lower and more radical monetary policies will cut interest rates and relax (continue to use drugs and never give up until the Great Wall), nominal interest rates will rise again and gold will rise again. Fu Peng said so.
Xu Ying, a senior precious metals analyst at the east securities derivatives research institute, told reporters that gold, as a traditional safe haven asset, was not spared due to the collective decline of commodities on the 28th, mainly due to three reasons:
First of all, the start of the gold price rise was obviously earlier than the sharp fall of European and American stock markets. Gold began to rise in mid February, when the stock market continued to reach a new high. Until Apple issued a warning of revenue reduction, and the epidemic in Japan and South Korea began to spread significantly, which led to the increase of supply chain concerns, the overseas stock market began to fall, while gold began to rise to $1689 / oz There was a profit taking offer.
Secondly, from the perspective of liquidity and safe assets, the risk aversion of US debt is better than that of gold. The requirement of liquidity coverage in Basel III improves the demand for us debt in critical times. So we see that both nominal interest rate and real interest rate are falling, while gold is falling.
Finally, when the gold already exists in the portfolio, the liquidity risk will spread among the various assets, and the portfolio position adjustment and cash demand will lead to the sale of gold. In addition, investors may be reluctant to sell loss assets, but will choose to sell assets with rising value.
Xu Ying believes that the response of the capital market shows that the spread of the overseas epidemic has caused a drag on the global economy, with an increase in recession expectations and an increase in deflation expectations. Before that, the Federal Reserve thought it was too early to judge the impact of the epidemic on the economy, without suggesting that the interest rate cut was tough. After the stock market crash, the financial situation of the United States deteriorated sharply, which will be transmitted to the real economy in the long run. Last night, Federal Reserve Chairman Powells speech turned to dove. It is likely to see the Fed cut interest rates or inject liquidity into the market at the interest rate meeting in March as soon as possible. Gold price is not pessimistic, the long-term bullish view remains unchanged, and the short-term callback is actually a configuration window.
New coronavirus is still spreading overseas
Quite a few novel coronavirus is still spreading in the extreme panic of overseas markets.
According to CCTV news broadcast, novel coronavirus pneumonia, WHO director general, said in Geneva in February 27th that the new global crown pneumonia epidemic prevention and control is at a decisive moment, and all countries should formulate a comprehensive epidemic prevention and control plan.
Tan Desai said that in the past two days, the number of new confirmed cases reported by other regions of the world outside China has exceeded the number of new confirmed cases in China, and now the region outside China is the biggest concern of who. Who advocates that every country must be prepared for all possible situations at the same time, and that no country should take chances that it will not have cases.
From the data point of view, there are new cases in the United States, Europe and other regions.
Chinas new novel coronavirus pneumonia has been reported in February 29th, and has been added to 2931 cases in 594 cases of new crown pneumonia in China, as reported at 29 pm local time 9.
According to foreign media reports, health officials in California confirmed Tuesday that a second case of new coronavirus infection from an unknown source occurred in the United States. The patient did not travel abroad or contact with known patients. This new case shows evidence of community transmission, but the extent of transmission is still unclear, said Sarah Cody, director of public health in Santa Clara County, near San Francisco
As of February 28th, novel coronavirus pneumonia cases were 62 cases in the US. Among the confirmed cases in the United States, 44 are from Japans Diamond Princess cruise ship, 3 from Wuhan, China, and 15 from the United States.
Novel coronavirus pneumonia was confirmed novel coronavirus pneumonia in Iceland, which was confirmed in February 28th by a Iceland man returning from northern Italy. This is the first case of new crown pneumonia in Iceland.
Novel coronavirus pneumonia was detected in the man after being tested at 1 p.m. local time 28 days later, and the man was quarantined at the National University Hospital of Iceland, Icelands civil defense and emergency management department said in a statement.
The man is not seriously ill but shows typical symptoms, the Icelandic government agency said in a statement The man recently visited northern Italy, but did not go to the identified danger area.