The price of gold broke through $1900 and approached a record high

category:Finance
 The price of gold broke through $1900 and approached a record high


Just in March this year, the international gold price was still on the line of 1450 US dollars / ounce, with an increase of 30% in just four months, which is rare for the trend of gold price.

This round of gold price rise started in the second half of 2018. Driven by the easing monetary policy of the Federal Reserve to cut interest rates, golds hedging property continued to gain momentum, rising steadily from below $1200 at that time, with a rise of 63% in just two years.

On July 24, the Federal Reserve said that in the latest week, the total assets held by the Federal Reserve rose slightly to $6.964 trillion, nearly doubling from the same period last year. In addition, the European Union has recently reached a consensus on the economic rescue plan, which will set up a recovery fund with a total amount of 750 billion euro, which is beneficial to the euro and negative to the US dollar, which is also one of the factors boosting the upward trend of gold prices.

01. The weakening dollar also supports the gold price

Whether the current strong inflation expectation will be falsified in the future is still unknown. However, another factor, the decline of the dollar index, is also supporting the gold price.

The trend of gold price is contrary to that of the US dollar index. Recently, the US dollar index has continued to decline. Especially after the European Union plan was finalized, the euro rose sharply against the US dollar, thus making the US dollar index fall rapidly.

The EU recovery fund agreement pushed the euro to its highest level since the end of 2018, which was seen as a signal to sell the dollar. The dollar index fell below the March low of 94.65, reaching its lowest level since the end of 2018. The dollar index fell more than 1% this week, the fifth consecutive week of decline. The dollar index has fallen more than 8% since its peak at the end of March.

The weakening US dollar and inflation expectations triggered by economic stimulus measures pushed gold prices up to US $1897 per ounce yesterday, and to US $1892.33 yesterday evening, up 24% so far this year.

02. In the first half of the year, the inflow of gold ETF reached US $40 billion

The direct reason for the rise in asset prices is that there is continuous buying of funds. The same is true for gold.

According to the Research Report of the world gold association in June this year, the total position of global gold ETF increased by 154 tons again in May, which is equivalent to the net inflow of US $8.5 billion (total asset size increased by 4.3%), and the total scale reached a record high of 3510 tons. As of early June this year, global gold ETFs had net inflows of US $33.7 billion, exceeding the highest annual net inflow of US $24 billion set in 2016.

According to the World Gold Council, the gold market has attracted a large amount of capital inflow in a short period of time. Take gold ETFs, for example. A year ago, the global scale was only $118 billion, but now it has almost doubled to $215 billion.

In the past year, nearly $100 billion of capital has flowed into it, of which about $20 billion, or one fifth, came after June 1.

In the first half of this year, the inflow of gold ETFs also reached US $40 billion, a record high, eight times the same period last year.

After the financial crisis in 2008, in the face of the sharp decline in global interest rates and the large-scale economic stimulus policies of various countries, investors generally expect super inflation to be imminent.

Under the background of the flood of US dollar currency, gold highlights its financial attributes. In the three years from 2008 to September 6, 2011, the price of gold rose sharply from 681 USD / oz to 1923.70 USD / oz, nearly tripled, and set a new record of gold price in human history.

03. Challenge $2000

There are growing signs that the crown disease pandemic is hindering economic recovery, and the recent increase in geopolitical risks has also boosted demand for the precious metal. The crisis has prompted investors to hoard gold to hedge against possible turbulence in the broader market, and gold prices are expected to continue to rise to record highs in the next 18 months.

Rhona OConnell, an analyst at stonex, believes that gold prices may hit above $2000 in 2021. The greater the uncertainty about epidemic control and even the global economy, the more bullish gold prices will be.

Kitco analyst Jim Wyckoff predicts that the next major target for spot gold is the 2011 high of $1921.15, which means gold may soon challenge the $2000 mark. According to the world gold association, the global stock market has been in a unilateral upward trend for more than a decade. The new crown epidemic broke this situation, causing the stock market to fall sharply, and all major global stock indexes fell by more than 30% in the first quarter. However, since then, the stock market has rebounded strongly, especially technology stocks. But stock prices do not seem to be fully supported by fundamentals or overall economic conditions. Many investors expect to profit from the trend of the current stock market rising unilaterally, but there is growing concern that this valuation bubble may lead to a sharp pullback in the stock market, especially when the global economy is again frustrated by the second wave. Gold with hedging properties will help to mitigate the risk of stock volatility. Source: Yang Qian, editor in charge of Beijing Business Daily_ NF4425

Kitco analyst Jim Wyckoff predicts that the next major target for spot gold is the 2011 high of $1921.15, which means gold may soon challenge the $2000 mark.

According to the world gold association, the global stock market has been in a unilateral upward trend for more than a decade. The new crown epidemic broke this situation, causing the stock market to fall sharply, and all major global stock indexes fell by more than 30% in the first quarter. However, since then, the stock market has rebounded strongly, especially technology stocks. But stock prices do not seem to be fully supported by fundamentals or overall economic conditions. Many investors expect to profit from the trend of the current stock market rising unilaterally, but there is growing concern that this valuation bubble may lead to a sharp pullback in the stock market, especially when the global economy is again frustrated by the second wave. Gold with hedging properties will help to mitigate the risk of stock volatility.