Breaking through $2,250! Spot gold hit another all-time high

Edited by: Bi Luming

During the Asian session on Monday (April 1), spot gold prices rose all the way after the opening of the day, rising above the $2,250 line for the first time, hitting a new all-time high.

After the opening of A-shares, the gold sector continued to be strong, and Laishen Tongling opened with a daily limit.

According to CME's FedWatch tool, the market expects the probability of a rate cut in June 2024 to drop to 61%, and the number of rate cuts has been maintained three times this year, with a cumulative rate cut of about 75bp.

For the performance of gold prices in the future, many industry insiders believe that there are still many uncertainties in the short term, so that gold prices may have a short-term pullback. In the long run, there is a high probability that gold prices will continue to fluctuate and rise.

According to the China Securities Journal, Wang Yanqing, chief researcher of precious metals at China Securities Construction Investment Futures, believes that the Federal Reserve has not confirmed the timing of interest rate cuts, which brings uncertainty to the future path of interest rate cuts. However, the market has traded very strongly in anticipation of a rate cut, which has brought strong support to gold. At the same time, excessive early trading expectations may also accumulate some risk, or there may be a short-term correction in gold.

Wang Yanqing said that the U.S. monetary policy from tight to loose is the general trend, superimposed geopolitical risks increase, central banks are continuing to increase their holdings of gold, gold will still be easy to rise and difficult to fall.

Goldman Sachs analysts Nicholas Snowdon and Lavinia Forcellese recently pointed out in a report that the Federal Reserve's monetary policy shift, the recovery of financial demand such as ETFs, geopolitical risks and other factors will push the price of gold to $2,300 per ounce by the end of 2024.

Analysts at the International Derivatives Think Tank believe that in the short term, the PCE inflation data in the United States in February is in line with expectations, diverging from the CPI, but it has begun to resist the decline, inflation is still resilient, the Federal Reserve released the June interest rate cut guidance due to concerns about financial risks, and the financial market rushed to push up the price of precious metals. In the medium to long term, in the face of financial stability risks, the Fed is no longer obsessed with core inflation touching the 2% policy target, but chooses to cut interest rates in a small forward-looking manner, while slowing down the pace of balance sheet reduction. As a result, precious metals prices are driven by long-term bullishness amid a farewell to the contraction of central bank balance sheets.

Huaxi Securities Research Report pointed out that in the context of the increased expectations of interest rate hikes in the United States and the increase in global risk aversion, gold prices still have strong support, and gold jewelry has sector investment opportunities. During the upward phase of gold prices, the inventory appreciation of gold jewellery brands is expected to increase the profit margins of wholesale and retail channels, providing support for short-term performance. It is recommended to pay attention to: Lao Fengxiang, Chow Tai Fook, China Gold, etc.

Guohai Securities said that in the short term, there is a risk of shock after the sharp rise in gold prices, but in the medium and long term, the overall easing of overseas monetary policy is conducive to the strengthening of precious metal assets, and the logic of gold rise is still sufficient. In 2024, as the expectation of a US interest rate cut is gradually realized, the decline in real interest rates is expected to push gold prices upward. However, the current US growth and inflation resilience are still strong, and the continuation of subsequent easing needs more signals of economic weakness.

In addition, in 2024, the political situation in many regions of the world will remain tense, and many countries, including the United States, Mexico, and other countries will hold elections, and there is still great geopolitical uncertainty. Driven by these uncertainties, the demand for gold, as a traditional safe-haven asset, tends to increase. The total U.S. national debt has exceeded $34 trillion, and the size of the U.S. national debt will nearly double in the next 30 years. This has made more and more countries question the credibility of the dollar, and "de-dollarization" may become a future development trend in the world, while the attractiveness of gold is expected to increase relatively.

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