Gold prices fell 9 times in a row! Gold sales fell during the National Day holiday, and the industry said that the short-term gold price was too high to buy
From September 22 to October 5, the gold price of New York futures has fallen for nine consecutive trading days, from 1944 US dollars / ounce to 1826 US dollars / ounce, which also broke the record of six consecutive losses in August last year, with a cumulative decline of 5.20%. Industry insiders said the decline was very similar to 2011, when it also plummeted during the National Day, and Shanghai gold prices are also expected to open sharply lower next week. As of 11 a.m. on October 6, the price of gold in New York temporarily closed at $1,837 an ounce.
On October 6, near the end of the holiday, the reporter visited several gold sales stores in Beijing and found that unlike the hot sales of domestic gold at the end of September, there were not many customers in gold sales stores during the National Day holiday. The reporter came to the CICC gold jewelry store, the counter sales said that in mid-September there were more customers who came to buy gold, but there were many inquiries during the holiday, but the number of large-scale purchases decreased, which may be related to traveling to Beijing during the National Day. In addition, the international gold price has been falling recently, and the wait-and-see mood of customers has increased.
Gold sales fell during the National Day holiday
It is understood that compared with the high of 610 yuan per gram in September, affected by the continuous plunge in international gold prices, there has been a significant downward adjustment. On October 6, the price of Chow Tai Fook gold jewelry was 583 yuan / gram; The price of Caibai jewelry gold jewelry is 580 yuan/gram, and the price of Lufu jewelry gold jewelry is 583 yuan/gram. The reporter found that unlike the price of jewelry gold, the quotation of investment gold bars was relatively low, and it had dropped to 459 yuan / gram on October 6.
In addition, the reporter also came to several gold sales stores in Blue Harbor, and the reporter also asked several customers who bought gold at the counter, and for the current gold price, the reporter found that the customers who came to buy gold have diverged. In the process of communicating with the gold counter salesman, Mr. Li on the side told the reporter about his experience of buying gold.
Mr. Li told the "China Times" reporter that the price of gold is too high now, and buying at a high level is easy to be trapped. Now the price trend of gold is a bit similar to 2011, when the international gold price has risen to about 1940 US dollars / ounce in early September, people are extremely enthusiastic to buy gold, most people think that gold has the ability to further appreciate, on a whim I also bought 60,000 gold jewelry and various limited edition silver bars.
"At that time, there was no analysis of gold price trends, watching gold prices rise every day, thinking that you could sit and wait for gold to skyrocket when you bought it once. However, who would have thought that what was waiting for was not a sharp rise, but a sharp fall, and in late September 2011, the international gold price plummeted, which fell for 5 years, and the international gold price only gradually began to rebound in December 2015, which also means that my gold investment was trapped for 12 years. Mr. Li said.
Mr. Li suggested that gold can hold some gold jewelry, and the amount should not be too large, otherwise it will be held at a high price, and when gold plummets, physical gold is difficult to cash. "Before the National Day, I took advantage of the high price of gold to sell some small gold bars, and finally got some copies back. However, the other gold jewelry cashing ability is much worse, the purchase price and the recycling price are completely disproportionate, want to let the gold store recycle, each store's recycling standards are different, the jewelry can only continue to hold. ”
(Image source: Photo by Gold Jewelry Store)
The international gold price fell for 9 consecutive years
It is understood that the international gold price has fluctuated sharply this year, and the first quarter was affected by the bankruptcy of the Bank of America, and the gold price continued to be at a historical high in the first half of 2023. Since May 4, affected by factors such as the continuous rise in US bond yields, the international gold price has fluctuated and fallen, but at the same time, the domestic gold price continued to break upward. In the third quarter, domestic and international gold prices once diverged, and the difference between internal and external prices rose to 30 yuan / gram.
It is worth noting that on September 15, the price of Shanghai gold futures on the Shanghai Futures Exchange once stood at an all-time high of 480.26 yuan / gram. Compared with the high price of Shanghai gold futures, the retail price of domestic gold jewelry rose to 610 yuan / gram, hitting a new stage high. As the price of gold continues to soar, major domestic gold brand stores are crowded, and gold-related products continue to sell hotly.
However, from September 22 to October 5, the gold price of New York futures has fallen for nine consecutive trading days, breaking the record of six consecutive losses in August last year and hitting a new low in nearly seven months, with a cumulative decline of 5.20% respectively. The Shanghai Futures Exchange Shanghai Gold 2312 contract also began to fall on September 26, and the price of Shanghai gold fell to 455 yuan / g on September 28, and finally closed at 459.50 yuan / g. Industry insiders said that due to the suspension of trading in the domestic market during the National Day holiday, the opening price of Shanghai gold is expected to fall on October 9.
"The Fed's monetary policy has long been the anchor of global asset pricing, with 11 consecutive cumulative rate hikes of 525 basis points since it began raising interest rates in March last year. On September 20, the Fed made its first decision to pause interest rate hikes, but Powell then made a hawkish speech, reiterating that the goal of fighting inflation remains unchanged. Huang Jinwen, former director of strategic planning at the Chicago Mercantile Exchange, said in an interview with the China Times.
(Gold and 10-year U.S. Treasury yield chart Image source: provided by respondents)
Huang Jinwen said that the change in the Fed's interest rate hike path has prompted investors to adjust their benchmark judgments, abandon the illusion of recent interest rate cuts, and take long-term high interest rates as the new basic assumption. This triggered a repricing of a large class of assets, causing changes in international financial markets in the past two weeks. Since gold is negatively correlated with U.S. Treasury yields, gold is an interest-free asset, U.S. Treasury yields rise, investors buy U.S. bonds and sell gold, causing gold prices to fall.
The industry says that short-term gold prices are too high to buy
With the temporary lifting of the risk of the US government shutdown, the expectation of a soft landing of the US economy continues to heat up, and the US dollar index and US Treasury yields are strong, and the international gold price has further declined. In addition, the US ADP employment report, known as "small non-farms" on October 4, showed that US private sector employment increased by only 89,000 on a seasonally adjusted basis in September, the lowest since the beginning of 2021, and significantly less than the expected 150,000, and revised upwards from 177,000 to 180,000 in the previous month.
Meanwhile, Ole Hansen, head of commodity strategy at Saxo Bank, said demand for gold as a hedge against soft landing failures is unlikely to disappear as the U.S. economic outlook faces increasing challenges in the coming months. With this in mind, maintaining a patiently bullish view on gold, while watching to see if gold can still withstand higher yields and a stronger dollar in the short term, the timing of a new upward push will still rely heavily on U.S. economic data.
(Chart of the dollar index and the federal funds rate Image source: provided by the respondent)
"Since gold is negatively correlated with the dollar index, as a competitive asset, the dollar strengthens, investors will buy dollar assets and sell gold, causing the price of gold to fall. In addition, the strengthening of the US dollar has raised the cost of buying gold for investors holding non-US currencies. Therefore, the weakening demand for gold is also responsible for the decline in the price of gold. Huang Jinwen, former director of strategic planning at the Chicago Mercantile Exchange, said in an interview with the China Times.
Huang Jinwen said that the Fed's interest rate policy is still the most important factor affecting the future price trend of gold. CME Group's Fed Watch predicts through futures trading data that the Fed will likely maintain interest rates at their current range of 5.25-5.50% until the middle of next year. Therefore, the repricing of assets in the international financial markets has only just begun, and the price correction of gold is not yet over. If the dollar index continues to rise and U.S. Treasury yields continue to rise, there is still room for international gold prices to fall.
However, Xu Yaxin, dean of Craftsman College, said in an interview with the China Times that from the medium-term perspective, the current state of the Fed maintaining high interest rates is unsustainable, after all, up to $33 trillion of debt, the cost of interest rates that need to be replaced is raised. This also means that in the next six months, the Fed's monetary policy will turn to easing, that is, the decline of US bond yields from a high level is a high probability event, and it also means that the medium-term outlook for gold prices is still optimistic after completing this wave of bottoming towards $1800 / oz.
In addition, the US Treasury yield soared from 1% to 5%, and gold would sell off because gold had no yield. But would it be the same logic for bond yields to go to 5%-10% or 10%-20%? In addition to the rate of return, safety should also be considered. Therefore, another scenario is that the yield of U.S. bonds continues to climb, and after breaking through a certain threshold, let the market begin to believe that the U.S. debt is going to default, then the price of gold will also soar, at that time, the market in the panic, the consideration is not yield, but the safety of funds, that is, gold has a hedging function.
Responsible editor: Shuai Kecong Editor-in-chief: Xia Shencha