Financial Associated Press (Shanghai, intern reporter Xu Chuan) news, on Friday, affected by the spread of the new crown mutation strain, the volatility of the international financial market intensified, driving the rise of risk aversion. From the perspective of market trends, the emergence of the mutated strain once triggered the price of New York gold futures to break through the $1800 / ounce mark, but this week, gold prices failed to continue to boost.
Industry insiders said that although the trend of gold prices will still be affected by the evolution of the epidemic, in view of the market's expectations for this, it is difficult to further highlight gold's safe-haven attributes in the short term, or it will still maintain a volatile market. For the medium- and long-term trend of gold prices, industry insiders generally believe that as the Fed's interest rate hike process may be advanced, it is expected to push the real interest rate of the US dollar to climb, so the upside of gold prices will encounter some resistance.
Mutant strains are more difficult to stimulate gold's safe-haven properties
The mutant strain disturbed the global market, and the VIX panic index broke through 28% on Friday (November 26), a new high since January 24 last year, indicating that the downward pressure on the market has increased, and the safe-haven attributes of gold that has maintained a shock downward since the beginning of the year have been revealed in the short term.
Specifically, at the beginning of last week, as the DOLLAR and US Treasury yields continued to rise, driving the decline in gold prices, but in the second half of the week, the mutant strain was worried about pushing up risk aversion, the main stock indexes in Europe and the United States suffered a setback, while the New York gold futures price rose to the $1800 / ounce mark intraday, but in the end of the session there was a certain decline, closing at $1790.50 / ounce.
"Last week, the minutes of the Fed meeting showed that they were open to interest rate hikes, raising expectations that the United States would raise interest rates several times next year, so the dollar strengthened sharply in the first half of the week, making precious metal prices weaker." Chen Sijie, a researcher at Huatai Futures, said that due to the re-severeness of the epidemic, the volatility of the financial market has intensified, while gold has been relatively strong because of its relatively strong hedging attributes.
Although this week's mutant strains continued to spread in many countries and regions around the world, but on Monday the European and American stock markets collectively picked up, gold's safe-haven demand also slipped compared with last week, gold prices stood at 1801.50 US dollars / ounce in the short term, but quickly slipped below the 1800 mark, closing at 1786.10, a daily decline of 0.25%. Today (November 30th) intraday, the oscillation pattern continued in the 1784-1797 range, and failed to challenge the 1800 mark again.
"At present, the mutated strain is not a 'black swan' event, because the mainstream market expectations are always worried about the recurrence of the new crown epidemic, and the so-called 'black swan' is a major risk event beyond the mainstream expectations." Jiang Shu, an expert at the whale platform think tank and general manager of the precious metals industry department of Shandong Futures, told the Financial Associated Press that the emergence of mutated strains is more difficult to stimulate the hedging properties of gold.
Huaan Futures Precious Metals Research Team pointed out that under the disturbance of the epidemic, the expected interest rate hike may drive the strong trend of the US dollar to slow down, but it is certain that the demand side will also be expected to slow down, so the gold price will be affected by the weakening of inflation and demand expectations or continue to maintain the shock pattern.
Gold price trend in the medium and long term or continue to be under pressure
"Whether the spread of new strains can be controlled before the end of the year and whether the harm is greater will determine the price trend of precious metals." If the epidemic develops in an unfavorable direction, gold prices are expected to be boosted in the short term. A relevant person in the global market department of the Bank of China pointed out that in the long run, the recurrence of the epidemic may lead to a deterioration of inflation while suppressing economic growth, so the impact path on gold prices is relatively complicated.
On the other hand, another major factor influencing the trend of gold prices is still the evolution of the Fed's monetary policy. Recently, the minutes of the Fed meeting show that more and more Fed officials have stated that if inflation is "high and unrecovered", they will be open to accelerating the cancellation of bond purchases, and will act faster to raise interest rates.
Liu Xin, a researcher at Merya Futures, said that "the expected increase in interest rates should reduce the attractiveness of gold, as higher interest rates raise the opportunity cost of holding non-yield gold".
Jiang Shu believes that from the history of the subprime mortgage crisis, it can be seen that in the process of raising interest rates after the Fed launched Taper, the US economic recovery process continued, the US dollar remained strong and the real interest rate of the US dollar climbed, affected by this, gold is still facing a downward trend. He also pointed out that it is expected that gold will have breathing space only after the Fed's first interest rate hike lands next year, ushering in a larger rally.
UBS Wealth Management's Asia Outlook 2022 also noted that inflation concerns are currently supporting gold prices, but gold prices are expected to gradually decline in 2022 as worries ease, the DOLLAR strengthens and real interest rates rise.
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