Gold breaks new record and silver continues to hit a new high of 7 years
As of 7:05 a.m. on July 28, spot gold rose above the US $1950 / oz mark, peaking at US $1952.18/oz, up about 0.5% within the day, and the rise of spot silver expanded to nearly 2%.
(image source: wind financial terminal APP)
COMEX silver futures closed 8.29% higher at $24.745/oz, a new high in more than seven years.
The US dollar index continued to hit a new low in recent two years
However, contrary to the trend of gold and silver prices, the US dollar index recently appears to be quite down and out, and the US dollar index has fallen to a new low in recent two years.
Late Monday in New York, the dollar index fell 0.74% to 93.6488, while non-U.S. currencies rose collectively. The euro rose 0.89% to 1.1752, the pound rose 0.63% to 1.288, and the offshore RMB rose 160 basis points to 7.0001.
(image source: wind financial terminal APP)
Bank of Shanghai has risen more than 23% since July
If we lengthen the time line, the performance of the precious metal plate is also commendable this year. Among them, the main contracts of Shanghai gold and Shanghai Bank increased by 21.31% and 20.62% respectively over the same period.
Gold jewelry is up 107 yuan / g this year
According to wind data, the price of physical gold jewelry of major domestic brands has risen to the highest level in recent years. As of July 24, the price of real gold jewelry of Lao Fengxiang and Zhou Dasheng was 549 yuan / g, a record high in recent ten years. The price of gold jewelry increased by 24 yuan / g in July and 107 yuan / g since this year.
The elder sisters who ride the storm have always been a force that can not be ignored in Chinas domestic investment market. If they missed gold jewelry at the beginning of this year, they would spend more than 4000 yuan to buy gold jewelry, such as gold bracelets (40 grams).
(image source: wind financial terminal)
As of June, the global gold ETF had a record net inflow for seven consecutive months. Global gold ETFs rose 104 tons in June (about $5.6 billion, equivalent to 2.7% of total assets under management), bringing its total position to an all-time high of 3621 tons.
Looking at the domestic market, according to wind data statistics, as of July 26 this year, all four gold ETFs in the whole market (excluding the newly established products this year) have achieved 22% returns.
Multiple factors boost precious metals rise
According to Guoxin Futures Research Report, the strong performance of precious metals in July was mainly boosted by rising inflation expectations, weak dollar index and high risk aversion.
In addition, the closure of silver mines in Peru and other major South American producing countries has disturbed the silver supply side. The recovery of clean energy and photovoltaic fields has boosted the demand for silver industry, and the concentrated influx of funds has further boosted silver prices.
According to the Industrial Research Report, the recovery of inflation and the weakening of the US dollar index have brought benefits to gold and silver, while geopolitical risks have added fuel to the fire. Silver, with stronger industrial attributes, rose and the ratio of gold and silver decreased. After that, the short-term may be adjusted, but it is difficult to change the long trend.
According to the analysis of CITIC Futures Research Report, the U.S. epidemic situation continued to slow down economic growth, the real interest rate was negative, international political tension intensified, the dollar weakened, the demand for safe assets surged, and funds continued to flow into precious metals.
In addition, according to the Southwest Securities Research Report, silver has both financial and industrial attributes. With the marginal recovery of industrial demand and the continuous increase of the gold silver ratio brought by the rising gold price after the epidemic situation stabilized, the gold silver ratio is expected to recover and return to the mean value.
Behind the big rise, institutions guess the top
Ping An Securities research paper said that looking forward to the future, the high risk aversion sentiment and the continued weakening of US dollar and US bond interest rates provided support for the high level of precious metals.
1. The long-term trend of us real interest rate is the core variable influencing the long-term trend of gold price. Under the weak dollar cycle, the strong logic of gold is expected to continue. Since the outbreak of the epidemic, 10-year US Treasury bonds have maintained negative interest rates, which has also become an important factor in promoting this round of gold market.
2. In the transition stage from KangBo recession to depression, the global economic downturn caused by the epidemic shock is likely to be the second shock during the KangBo recession period, which accelerates the bottom of the inventory cycle and brings the driving force for the upward cycle of gold price.
3. In the short term, the release of excess liquidity in overseas markets has also become a driving force for gold prices to rise in the future.
According to CITIC Investment Research Report, looking forward to the second half of 2020, in the uncertain environment of the new epidemic situation and policy response, and the uncertain environment that the US election may bring about the upgrading of periodic big country game, the main tone of US monetary policy easing will not be changed, and the periodic performance of Europe will be stronger than that of the United States, which will also be a high probability event. The global supply chain seems to have adapted to the first round of the new epidemic Gold, as a kind of loose and safe haven, has shown a strong performance. It is expected that the strength will remain strong before the US election. In the near future, it is expected to break through the record high and hit US $2000 / oz.
In addition, the gold silver ratio is expected to drop to around 75 in the next 6-12 months, and silver continues to be bullish! If the gold silver ratio returns to around 75, even if the gold price drops by 10%, silver should be above 22.1 USD / oz. if gold goes up further, silver is expected to break through the $30 / oz barrier.
Societe Generale research report also believes that the two major factors driving down the gold trend in the second quarter of 2020, namely, the weak demand in emerging markets and the lack of willingness of hedge funds to long gold, are turning into positive factors. Gold is expected to challenge a record high of US $2000 / oz in the next three to six months.
It is worth noting that the China Securities construction and investment futures research paper also reminded earlier that in general, economic opening and liquidity easing are superimposed, the market expects that the real interest rate will further decline, and precious metals have better support. However, we should also be vigilant against the risk that the U.S. epidemic situation rebounds, the optimism fades, and inflation rises less than expected.
Investment strategy outlook
According to Minsheng securities research and analysis, the global money printing mode has resumed, the European Central Banks 750 billion yuan recovery fund has been approved, and the US trillion dollar stimulus plan is about to be launched. At the same time, the yield control curve policy of the Federal Reserve is still expected, and the short-term fluctuation of gold price is upward. Inflation expectations gradually repair, real interest rates still have downward space, and gold prices fluctuate upward in the medium term. Global monetary easing environment is expected to continue, paper money credit is tested, and the long-term upward judgment of precious metals is maintained. In the early stage of global economic recovery, attention should be paid to the replenishment of silver brought by the recovery of its industrial properties.
According to the analysis of China Thailand Securities Research Report, under the logical framework of real yield rate, the driving force of the future rise of precious metals will also come from:
1. The weakening trend of the economy is hard to change, and the US remote interest rate may continue to decline.
2. Further repair of deflation expectations. All of these make the rising channel of gold smooth, and with the promotion of economic resumption of work and production, silver industry attribute is restored, with the option of over inflation. 3. Precious metals are still one of the key areas of this years configuration. According to Southwest Securities Research Report, with the continuous rise of gold price, there is a large space for recovery of the gold silver ratio, and the cost performance ratio of investment in silver is highlighted. After the gold silver ratio deviates from the average value, the average regression is usually completed by the increase of silver price exceeding that of gold price. With the stabilization of Xinguan epidemic situation, the demand of electronics, photovoltaic and other industries is warming up, and the demand for silver brought by 5g large-scale commercial use increases, so there is a large space for recovery of the gold silver ratio. Anxin securities has previously reported that the return of the king with steep silver slope is expected to open, suggesting that attention should be paid to A-share silver lead-zinc target. Extensive reading and strict investigation! Central bank issued a notice: touch the bottom line of consumer loans into the property market, Shanxi Yuncheng crackdown on 99 yuan to buy roast chicken free travel: immediately stop heavy! Central bank investigates Joint Lending of commercial banks_ NF4425
2. Further repair of deflation expectations. All of these make the rising channel of gold smooth, and with the promotion of economic resumption of work and production, silver industry attribute is restored, with the option of over inflation.
3. Precious metals are still one of the key areas of this years configuration.
According to Southwest Securities Research Report, with the continuous rise of gold price, there is a large space for recovery of the gold silver ratio, and the cost performance ratio of investment in silver is highlighted. After the gold silver ratio deviates from the average value, the average regression is usually completed by the increase of silver price exceeding that of gold price. With the stabilization of Xinguan epidemic situation, the demand of electronics, photovoltaic and other industries is warming up, and the demand for silver brought by 5g large-scale commercial use increases, so there is a large space for recovery of the gold silver ratio.
Anxin securities has previously reported that the return of the king with steep silver slope is expected to open, suggesting that attention should be paid to A-share silver lead-zinc target.