Standard Chartered Bank has raised its gold price forecast to $1689 / oz in 2020 and expects the average price of gold to be $1750 / oz in the fourth quarter of 2020.
The hot momentum of gold price rise has been transmitted to the consumer side. According to the Shanghai Securities News, the price of gold jewelry of major jewelry brands has reached 515 yuan / g, and the price of physical gold of many banks has exceeded 410 yuan / g. the banks financial manager has said frankly that some kinds of spot gold bars are going to be sold out.
Three positive factors push up gold price
It is generally believed in the industry that the main driving forces of golds rise include concerns about the spread of the epidemic caused by the resumption of work, the expected recovery of the Federal Reserves negative interest rate, and factors such as the beginning of crude oil production reduction. The markets fear of a deep recession in the global economy raised the risk aversion mood, and yellow gold once again played a dual role as an investment and risk averse asset.
Driven by the strong rise of gold price, asset prices related to gold have gained considerable gains this year, such as gold stocks, gold theme funds, precious metal theme funds, etc.
Since this year, the return rate of four gold ETFs has reached about 16.5%. At the same time of net value growth, the scale is also growing steadily. The increase in size indicates that investors are generally bullish on gold.
As of May 19, there are 12 gold concept stocks in the A-share market, except for 3 st stocks. The other 9 gold stocks have gained an average of 14.32% this year, with the highest growth of Chifeng gold up 100.2% in the year.
After todays opening, as of the publication of the 12 stocks except for two st stocks, the rest of the stocks rose.
Analysts believe that in the first outbreak, the global stock market plummeted, and investors had to sell gold in exchange for cash; but now the situation is different from that at that time. After the Feds unlimited easing, investors have enough cash on hand, and the fear of the outbreak will again increase the markets risk aversion, thus supporting the gold price higher.
Even in the past, the global central banks large-scale easing policy in the process of this round of economic rescue will take a long time for the market to digest.
The epidemic is a major crisis for the whole world. In order to deal with the crisis, the global central bank has opened an unprecedented mode of water release, which has brought about a large area of currency overgrowth and devaluation. In this context, gold that cannot be printed should be an important choice for asset preservation. Jiang Chao said.
Russ koesterich, portfolio manager of BlackRocks global distribution fund, agrees that there is an inverse relationship between gold and real interest rates: when interest rates (adjusted for inflation) are low, the opportunity cost of holding gold is also low. At present, the real exchange rate is negative, which means that even if inflation does not accelerate, the prospect of policy interest rate approaching zero (or even negative) will boost the attractiveness of gold in the foreseeable future.
Gold consumption keeps rising
According to the Shanghai Securities News, a gold counter salesperson said frankly that since May, especially during the May 1st period, the sales of gold accessories at the counter have increased significantly.
In the bank, the sale of specific kinds of physical gold is particularly hot.
Since the beginning of the year, the volatility of equity assets represented by stocks has increased, while the price of gold has increased by 14%, according to a bank financial manager in Shenzhen. In this context, the spot gold bars are out of stock.
Photo source: Photo Network
In Heyuan City, northeast Guangdong Province, the head of a jewelry store in the city said the retail price of gold had risen from 390 yuan per gram in January to 501 yuan now, according to Heyuan daily.
Due to the rise of gold price, two services provided by gold shops in Heyuan City are highly sought after. One is to trade in the old for the new. According to the head of a gold store, consumers can buy new jewelry by 1g to 1g with the old jewelry, but the new jewelry must exceed the old jewelry by more than 5g, which needs to be paid by consumers. The second is gold recovery. Consumers only need to carry ID card, invoice and old gold objects to handle gold recovery business. The recovery price is 345 yuan / g, which can be exchanged for cash.
Insiders: bargain hunting strategy is still effective
From the lowest 1451 US dollars / ounce at the beginning of the year to the highest 1760 US dollars / ounce on Monday, the biggest increase of international gold price in the year has exceeded 20%, which is based on the 18% increase of international gold price last year. How long will this trend last?
According to first financial report, Wang Xinjie, chief investment strategist of China wealth management of Standard Chartered, said that there may be three key factors behind the driving force of current market sentiment, which will also directly affect the performance of gold.
First, the next few weeks will be crucial to restart the economy - any sign of a second outbreak will support a stronger dollar. Second, renewed Global trade frictions could support a stronger dollar and other safe haven currencies. Finally, after the German courts recent ruling on ECB policy, markets may remain sensitive to EU solidarity, which could weaken the euro and boost the dollar if relations between EU Member States deteriorate.
In this context, Wang believes that the strategy of bargain hunting for gold is still effective.
In addition, according to the wealth management team of Standard Chartered Bank, the opportunity cost of holding gold is still very low at present because the real bond yield (excluding inflation) is unlikely to increase significantly.
The office of the chief investment officer of UBS wealth management also said gold remained an ideal risk hedging tool and was more attractive to investors who preferred physical assets. With real interest rates and the dollar down, UBS believes money will flow back into gold, so it will keep its gold price target for the next year at $1800. Mingming bond research team of CITIC Securities believes that the callback is an opportunity to intervene. In the future, high level debt pressure, low interest rate, broad currency, inflation recovery and uncertain international environment will all be the driving factors of gold price rise. However, it is very difficult for ordinary investors to catch the so-called low point, and they need to be careful not to catch up with the high point. Zhang Juntao, an analyst at Societe Generale research in foreign exchange commodities, pointed out the risks of gold investment. (statement: the content of this article is for reference only, not as investment basis. Investors operate on this basis at their own risk.) Source: responsible editor of daily economic news: Wang Xiaowu_ NF
The office of the chief investment officer of UBS wealth management also said gold remained an ideal risk hedging tool and was more attractive to investors who preferred physical assets. With real interest rates and the dollar down, UBS believes money will flow back into gold, so it will keep its gold price target for the next year at $1800.
Mingming bond research team of CITIC Securities believes that the callback is an opportunity to intervene. In the future, high level debt pressure, low interest rate, broad currency, inflation recovery and uncertain international environment will all be the driving factors of gold price rise.