Last week, after the gold price bottomed out and recovered, it fluctuated for three days in the range of 1720-1730 US dollars / ounce, and finally broke out on Friday, rising more than 20 US dollars, once again approaching the years high of 1750 US dollars. Gold prices rebounded sharply on Monday, with spot gold rising more than $15 to close at $1760.
Wang Xiang, fund manager of Boshi gold ETF, said that gold continued to maintain strong strength, mainly due to the impact of the Federal Reserves expectation of long-term easing commitment and the geopolitical situation. In recent interest rate resolution conferences and other speeches, Federal Reserve Chairman Powell repeatedly mentioned that he is still cautious about the stability of the US economic recovery and will maintain loose monetary policy support for a longer time.
On Monday, gold prices continued to rise, a medium-sized public fundraiser in South China said, because of concerns that the second spread of the new crown epidemic may force governments to implement new blockade measures, at the same time, it is expected that the global central bank will continue to implement ultra loose monetary policy to support the economy for some time, and the risk aversion mood will rise again.
Data shows that Comex gold futures have risen by more than 16% since the beginning of this year, attracting funds into gold ETFs. As of June 19, the gold ETF scale of four fund companies including e fund, Boshi fund, Huaan fund and Cathay fund totaled 21.181 billion yuan, a sharp increase of 44.34% over the end of 2019. Among them, the scale of e-fonta gold ETF increased by 78.94%, and the latest scale was 3.669 billion yuan. As the largest gold ETF, Huaan gold ETF rose 56.26% to 10.93 billion yuan. The ETF scale of Boshi gold increased by 31.71%.
Internationally, data shows that as of June 19, the total positions of the eight major global gold ETFs were 1912.85 tons, an increase of 356.62 tons compared with the end of last year, an increase of 22.92%.
Gold price still has strong support
Industry insiders pointed out that the current epidemic situation still plays a leading role in the strengthening of gold price, while the trend of gold price is affected by factors such as the fluctuation of US dollar exchange rate.
Cathay Pacific Fund said that in the short term, the US nominal interest rate level has reached a historical low, and the federal fund interest rate has reached a historical low range of 0-0.25%. If the Fed does not adopt a negative interest rate policy, the US nominal interest rate has limited space to fall. Affected by the epidemic, the economic outlook is bleak, and the upside space of nominal interest rate is also limited. The short-term factors affecting gold have shifted to changes in inflation expectations. In the medium term, as the oil price gradually stabilizes and the epidemic situation in Europe and the United States approaches the turning point, the market inflation expectation is expected to pick up, driving the real interest rate level down, and the comparative advantage of gold is expected to be highlighted.
Wang Xiang believes that Powell took over the environment of economic weakness and structural problems, and was in the late stage of a round of interest rate hike by the Federal Reserve, so he chose a relatively lagging policy path, and finally gave gold a chance to stabilize and strengthen. From this point of view, the large adjustment space of gold has been closed. In addition, the situation in some regions is volatile, which is likely to continue to intensify in the context of the US election, and promote the safe haven demand for gold. It is worth mentioning that Goldman Sachs recently raised its 12-month gold price forecast by 11% to $2000 / oz on the basis of low real interest rates and concerns about currency devaluation. It is believed that no matter what the long-term consequences of inflation and so on, stimulus measures will continue to be introduced all over the world, which will become the key factor to support the gold price in the long term. Source: responsible editor of Securities Times: Yang Bin_ NF4368
It is worth mentioning that Goldman Sachs recently raised its 12-month gold price forecast by 11% to $2000 / oz on the basis of low real interest rates and concerns about currency devaluation. It is believed that no matter what the long-term consequences of inflation and so on, stimulus measures will continue to be introduced all over the world, which will become the key factor to support the gold price in the long term.