Gold fell and crude oil rose, reflecting the decline in risk aversion and the rise in risk sentiment.
According to Wenhua financial data, the main contract of Comex gold futures fell by 4.63% from November 23 to 27, while the main contract of NYMEX crude oil futures increased by 7.18% in the same period.
Trend chart of international gold price and oil price since this year
Source: Wenhua finance and Economics
According to the calculation, the ratio of gold to oil has dropped to around 39 at present. In the early stage of Xinguan epidemic, the value once soared to around 180. According to the statistics of industry insiders, this data has been stable in the range of 10-30 for most of the history, and the average value of the data is generally around 16. If it is lower than 16, the price of gold is undervalued and the price of crude oil is overvalued; if it is higher than 16, it means that gold is more favored by investors.
The CBOE panic index (VIX), an indicator of investor sentiment, has experienced a significant setback in the past month, falling 6.79% to around 22.80 this week.
In addition, it is worth noting that with the weakening of the precious metal market, the gold silver ratio remains volatile, and the price difference of precious metals at home and abroad continues to converge. Generally speaking, the increase of the gold silver ratio means that the risk aversion sentiment of the market is heating up, and the demand for industrial products represented by silver is bearish; on the contrary, the reduction of the ratio usually means the enhancement of market confidence in the economy.
According to the data of gold market in the past ten years, the gold performance in January, February and August is generally good, while the performance in March, November and December is generally poor; from the trend of the past decade, the probability of gold price falling in November is higher than that of rising.
Gold market mixed
Zhao Xiaojun, precious metals analyst of CUHK futures, told zhongzhengjun that recently, the US data began to differentiate, employment and inflation began to fall, but economic activity continued to expand with vaccine expectation, and the initial value of PMI reached a 14 year high. Therefore, the market worried that the Federal Reserve did not need further easing, and the fiscal stimulus would be suspended with the endogenous recovery of the economy. Golds previous trading logic is facing correction, and the price continues to fluctuate and weaken, which makes the ETF funds tracking the price flow out significantly, making the disk support more fragile.
But the weakening dollar, as a force supporting the gold market, is still working. The macro research group of Industrial Securities pointed out that the decline of precious metals was not smooth under the interweaving of multiple spaces. In November, the vaccine in the third phase of the trial spread good news, which made financial markets less worried about the current intensified epidemic situation in Europe and the United States and the slowdown in economic recovery. Although the effectiveness, preservation conditions, production capacity and popularity of vaccines are still uncertain, the current market expectation is difficult to be falsified. The decline in uncertainty has directly brought about a rebound in the term premium of US Treasury bonds, which has a direct negative effect on precious metals. However, the weak shock of the dollar and the continued high copper prices give support to precious metals.
Expected to maintain a volatile pattern
Looking forward to December, Societe Generale Securities research pointed out that the downward risk of precious metals mainly comes from the continued decline of risk premium of gold relative to real yield. As the U.S. economy recovers better, it is often the worst performing stage for gold prices. During this period, the markets interest in gold investment declined, which may lead to further decline of risk premium.
At present, the short-term gold trend will still be weak due to the influence of technology and fund sentiment, but based on the weak dollar and still expanding monetary policy, there may be a certain technical rebound at the end of the year when the Federal Reserve makes a decision. Zhao Xiaojun said.
It is worth mentioning that some institutions believe that the weak epidemic prevention work in the United States still restricts the rise of risk sentiment brought about by the emergence of vaccines.
Huatai futures research points out that at present, some Americans still turn a blind eye to the requirements of epidemic prevention and control, and still gather on Thanksgiving Day, which may make it more difficult to carry out epidemic prevention work in the United States after entering the winter. Under such circumstances, the breeding of market risk sentiment may be suppressed, but for precious metal prices, there is no new fiscal or In the case of monetary policy stimulus, it is expected that the current pattern of weak shocks will still be maintained.
There are also institutions that continue to be bullish on gold performance. Volatility and uncertainty next year will be enough to support a return to $2000 an ounce in the next three to six months, Paul Robinson, managing director of the UK Commodity Research Institute, said. In the first half of next year, gold will be supported by strong fundamentals. The prospect of gold is very good and the price direction is good. There is still reason to hold gold. Robinson said gold was expected to remain the most valuable asset to hold in the first half of 2021.