SMM, April 3: With the escalation of the Middle East conflict again, the safe-haven attribute of precious metals shines again! Gold prices into April performance is still very crazy, Shanghai gold and COMEX gold in the 1st after refreshing the record high; on April 2, the market speculative funds long enthusiasm and the Middle East conflict escalation seems to offset the US dollar once stronger and the United States interest rates may remain high impact, so that gold prices on April 2 continue to refresh the record high. The U.S. dollar hit a nearly five-month high earlier on Tuesday, then weakened downward, and finally the U.S. dollar index fell 0.2% overnight, on the morning of April 3, gold prices once again staged a record high is used to break a scene, as of 9:57 a.m. on the 3rd, COMEX gold reported 2302 US dollars / ounce, up 0.89%, its all-time high was refreshed to 2308.8 US dollars / ounce; Shanghai gold reported 540.24 yuan / gram, up 1.63%, intraday hit 540.76 yuan / / COMEX silver rose 1.65% and Shanghai silver rose 3.54%. Gold prices not only frantically updated their all-time highs in March, but also performed well in March and even in the first quarter. Shanghai Gold rose 10.29% in March, its best monthly performance since August 2019, while COMEX Gold rose 9.74% in March, its best monthly performance since July 2020. In addition to the monthly line hitting a multi-year high, the quarterly increase of Shanghai gold and COMEX gold is also relatively objective, the quarterly increase of Shanghai gold in the first quarter was 10.36%, and the quarterly increase of COMEX gold in the first quarter was 8.83%.
In addition to rising happily in the futures market, precious metals once again staged a joint rise in futures stocks. As of 10:04 a.m. on the 3rd, the precious metals sector rose 4.24%, and in terms of individual stocks: Zhongrun Resources rose 9.89%, Sichuan Gold, Gold and Silver and Western Gold all rose to the top. As of 10:05 a.m. on the 3rd, the jewelry sector rose 2.86%.
Message plane
According to CME's "Fed Watch": the probability that the Fed will keep interest rates unchanged in May is 96%, and the probability of a cumulative rate cut of 25 basis points is 4%. The probability that the Fed will keep interest rates unchanged until June is 36.1%, the probability of a cumulative rate cut of 25 basis points is 61.4%, and the probability of a cumulative rate hike of 25 basis points is 2.5%. On Tuesday (April 2), local time, San Francisco Fed President Mary Daly said that the "three interest rate cuts this year" reiterated by officials last month was a reasonable expectation, but there was no rush to reduce borrowing costs at present. Cleveland Fed President Mester said Tuesday that the June policy meeting could be the time for easing to kick off if the data backs up. "If the economy is going as expected, inflation continues to fall back towards 2%, and the labor market and economic growth remain solid, then I think it's appropriate to start lowering the federal funds rate later this year," Mester said. She also does not expect to have enough information to make a decision to lower interest rates before the next meeting (May). "But by the time the meeting takes place on June 11-12, the situation may change,"
According to the statistics of the "National Futures Market Transactions in March 2024" released by the Mid-term Association on April 2, the trading volume of the national futures market in March was 630 million contracts and the turnover was 49,673.354 billion yuan, down 13.56% and 0.46% year-on-year, respectively. It is worth noting that among all commodities, gold deserves to be the number one popular variety. In terms of specific data, the trading volume of gold in March exceeded 6 million lots, an increase of 22.64% year-on-year and 208.86% month-on-month, and the turnover exceeded 3.2 trillion yuan, an increase of 44.48% year-on-year and 225.20% month-on-month. >> Click here for details
The U.S. manufacturing sector grew for the first time in a year and a half in March, as production rebounded sharply and new orders rose, but employment remained subdued, with "mass layoffs" and input prices rising. The Federal Reserve Bank of New York said on Monday that core inflationary pressures had weakened in February. According to the CME Group FedWatch Tool, traders are pricing in a 57% chance that the Fed will start cutting interest rates in June. Despite the gains in the US dollar on the news, gold continued to strengthen.
SPDR Gold Trust, the world's largest gold exchange-traded fund (ETF), reported that its gold holdings stood at 826.98t (26,588,275oz) as of Monday, down 0.38% or 3.17t from 830.15t in the previous session.
Voices from all sides
For the gold price to refresh the high, Jinyuan Futures said: the market's enthusiasm for precious metals is still high. On the data front, U.S. job openings in February were slightly higher than expected, with the lowest voluntary turnover rate since 2020 and the highest number of layoffs in nearly a year. U.S. JOLTS job openings in February were 8.756 million, slightly better than expected, and the previous January value was revised down to 8.748 million. The voluntary turnover rate was 2.2% in February, the lowest level since 2020. The number of layoffs rose to the highest level in nearly a year due to an increase in layoffs in the leisure and hospitality sectors. The final value of the Eurozone manufacturing PMI in March was 46.1, a three-month low. The performance of the manufacturing industry in the euro area countries is differentiated, with the PMI of Germany and France continuing to shrink, and Italy and Spain resuming growth. German inflation fell for the third month in a row, with German CPI rising 2.3% year-on-year in March, down from 2.7% in February and market forecasts of 2.4%, with food costs being the main driver of the slowdown. The probability of an interest rate cut by the European Central Bank in June has increased. At present, the price of gold has hit a new record high, and the price of silver has also risen sharply. We maintain a bullish view on the medium- and long-term trend of precious metals, but the domestic holiday is approaching, and overseas will release heavy data including US non-farm payrolls data and Powell's speech, market volatility may intensify, and it is appropriate to wait and see at present.
China Securities Construction Investment said that the current round of inflation and asset price trends are very similar to the first wave of high inflation in the 70s, and there are signs of US inflation rising again in the future. Once the rebound in inflation is established and consumer confidence falls again, US stocks will once again face downward pressure. Gold has room for further upside after the data confirms that inflation will pick up again in the future. Gold has more credit hedging and anti-inflation attributes than U.S. stocks in the period of high inflation, and gold and U.S. stocks may turn from the current resonance rise to divergence in the future, and gold will have relative returns relative to U.S. stocks.
Huatai Securities Research Report believes that in the first quarter of 2024, the domestic RMB-denominated gold and silver prices will be better than the dollar-denominated LME gold and silver prices year-on-year, and they will achieve positive growth year-on-year. We believe that domestic gold and silver prices are better than overseas, mainly due to more accommodative domestic monetary policy. We believe that the current price of LME gold may rise to the range of $2,600 to $3,000 due to the return of U.S. liquidity to loosening, the world's major central banks continue to maintain a large level of gold purchases, coupled with the increase in the world's major gold ETFs and the risk of geopolitical events.
Saxo Bank's Ole Hansen said: "Speculators who have followed the momentum are joining the buying bandwagon by retail investors and central banks, adding to their already high long positions after gold broke above $2,200. In addition, there is no doubt that geopolitical tensions add additional support. ”
Independent analyst Ross Norman said: "Gold's rally is so unusual as significant traditional headwinds such as a rising dollar, rising US Treasury yields and an increased likelihood of US interest rates remaining elevated. In addition, we are entering a seasonal off-season of demand. You can't imagine a worse background than that. ”
The World Gold Council's Cabatoni said the rally so far has been driven by aggressive gold purchases by central banks around the world. Due to geopolitical risks, domestic inflation and a weaker US dollar, central banks are buying gold in order to diversify their reserve portfolios. "There are very good reasons for central banks to continue buying...... But it remains to be seen whether they will continue to buy so much and for such a long time. The World Gold Council pointed out in the "Global Gold Demand Trend Report" released a few days ago that the changes in the inflow and outflow of global gold ETFs (exchange-traded funds) reflect investors' attitudes towards gold. In 2023, the inflow of gold-backed ETFs into the Chinese market reached a record high of about RMB5 billion, increasing to RMB29 billion.
Peter Schiff, CEO and chief global strategist at Euro Pacific Asset Management, said in a serious light that most investors, as well as governments and central banks, are ill-prepared for major events. He stressed that the Fed's interest rate cut policy could exacerbate the inflation problem. It is extremely rare for gold to rise above $30, especially if there is no news to push it. Schiff once again stressed that important events are taking place at the moment, but investors and governments and central banks are clearly underprepared. He observed that commodity prices had skyrocketed, while the Fed insisted that inflation was moving closer to its 2% target and that interest rate cuts were imminent. This situation is undoubtedly thought-provoking, and he hopes that Wall Street or the financial media will soon see through this situation. Schiff noted that the rise in gold prices is not just because of the Fed's interest rate cut expectations. In fact, the rise in gold prices reflects the mistaken decision to cut interest rates. If inflation falls along with interest rates, then real interest rates will remain unchanged. However, as inflation is rising, real interest rates are actually falling, which is the underlying reason for the rise in gold prices. >> Click here for details
Citi analysts previously described themselves as "bullish on gold in the medium term" in a note and expected a 25% chance that gold would reach a record $2,300 an ounce in the second half of the year. However, their base case forecast for gold remains at $2,150 and reiterates that it could even reach $3,000 an ounce in the next 12 to 16 months. Citi sees gold as a "recession hedge" in developed markets and is increasingly seeing the benefits of uncertainty over the US election in November.
Recently, Bank of China, China Construction Bank, China Merchants Bank, Bank of Ningbo and other banks have issued similar announcements to raise the minimum purchase amount of gold accumulation funds, ranging from 100 yuan to 120 yuan. Lou Feipeng, a researcher at the Postal Savings Bank of China, said in an interview with Securities Daily that recently, a number of banks have raised the starting amount of fixed investment transactions in gold accumulation business, which is actually a reminder to investors to pay attention to potential volatility risks in the future to a certain extent, which will help the market return to rationality and better implement investor suitability management.
The release of the World Bank's Gold Investment Handbook for Asset Managers provides a succinct explanation for the trend of central banks reducing their holdings of US Treasuries and increasing their share of gold reserves. The manual, written by Kamol Alimukhamedov, Deputy General Director of the Central Bank of Uzbekistan and member of the Investment Committee, provides a detailed overview of this phenomenon. With a comprehensive overview of the gold market structure, strategic asset qualifications, and trading, custody, logistics, and accounting practices, the handbook highlights the importance of central bank gold reserve trends. In the handbook, Alimukhamedov delves into the key role of gold in the modern global financial system. In addition to being a safe-haven against inflation, gold is also seen as a safe asset and an important reserve asset for central banks. The handbook also highlights the market structure and credentials of gold as a strategic asset. The handbook discusses the geopolitical considerations of central banks' willingness to trade gold for dollars. Alimukhamedov stressed that existing studies have confirmed a positive correlation between gold prices and geopolitical risks, even taking into account the uncertainty in financial markets. The study further distinguishes between perceived or perceived geopolitical risks and actual or realized geopolitical risks, noting that the latter has a more significant impact on the rise in gold prices. Alimukhamedov believes that more countries are turning to gold could raise the price of gold and push gold to become a more expensive reserve asset, which in turn will change the structure of global reserve assets. >> Click here for details
Cinda Securities Research Report pointed out that since November 2022, gold prices have continued to rise, and now they have broken through record highs. In Q4 2008 and 2019, gold was stronger than other commodities, but then 2009 and 2020 were both full-fledged bull markets for commodities. Similarly, from 1980 to 2005, the price of gold was ahead of other commodities in all commodity cycles, and most of the leading time was between half a year and one year. Gold is the most special of all commodities, with strong financial attributes, little correlation between demand and industrial enterprises, and is more likely to be affected by the willingness of various investors to allocate it. In our view, long-term inflation is likely to be the most important of the core factors affecting gold. Because if you look at the perspective of 5 years or more, the difference between the price of gold and other commodities is not large. From 1980 to 2000, U.S. interest rates continued to fall, and gold theoretically benefited the most, but gold, like other commodities, was also a volatile market. From 2002 to 2011, China's economy industrialized rapidly, and in theory, industrial commodities benefited the most, but gold was also a big bull market. In the past two years, the price of industrial products has been weak, mainly because the inventory cycle of China and the United States has declined simultaneously, and gold is more affected by interest rates, so it started to rise earlier, and as the global inventory cycle bottoms out, other commodities are also expected to follow in the footsteps of gold and enter the overall bull market. >> Click here for details
Since the beginning of this year, the prices of various commodities have opened a "soaring" mode, and the performance of gold, copper, aluminum and other metals is particularly eye-catching. Goldman Sachs analysts Nicholas Snowdon and Lavinia Forcellese noted in a report on March 28 that copper will rise to $10,000 a tonne, aluminum will rise to $2,600 a tonne and gold is expected to be $2,300 an ounce by the end of the year. Goldman Sachs expects the Fed's monetary policy pivot, the recovery of financial demand such as ETFs, geopolitical risks and China's demand for physical goods to push the price of gold to $2,300 an ounce by the end of 2024. >> Click here for details
As of March 30, the release of the 2023 annual report of the public fund has basically ended, and the data of the top ten holders of public offerings have also been disclosed, and a number of well-known private placements have appeared in the top ten holders of various types of products. As the world's number one hedge fund, Bridgewater Fund still loves gold ETFs, and the overall adjustment is not much from the middle of last year. As of the end of 2023, Bridgewater's All-Weather Enhanced China Fund No. 1, No. 2 and No. 3 are among the top 10 holders of Bosera Gold ETF and E Fund Gold ETF. Bridgewater All-Weather Enhanced China No. 3 is also the third largest holder of Huaan Gold ETF. Since the first half of 2022, Bridgewater Fund has been among the top 10 holders of Huaan Gold ETF, E Fund Gold ETF and Bosera Gold ETF. As of the end of 2023, Bridgewater's above three products are among the top 10 holders of E Fund Gold ETF and Bosera Gold ETF. In terms of holdings, as of the end of last year, Bridgewater's all-weather enhanced China No. 1, No. 2, and No. 3 held 13,975,200 shares, 14,412,400 shares, and 16,088.29 shares respectively. Compared with the middle of last year, the shares held by No. 1 and No. 3 remained unchanged, and No. 2 decreased by 14.4251 million shares while withdrawing from the top 10 holders of Ann Gold ETF.
Wang Zhifan, a senior researcher at the foreign exchange commodity department of Industrial Research Company, said that the U.S. non-farm payrolls for March will be released in the near future, and according to the leading indicators, the new non-farm payrolls may fall, but it should be noted that the unexpected increase in non-farm payrolls data will bring pressure on gold prices. In the long run, the expansion of government leverage will continue to drive the gold price pivot, and the Shanghai gold price will remain stronger than the London spot gold.
Xu Ying, chief analyst of macro strategy of the macro strategy department of the Orient Securities Derivatives Research Institute, reminded that the short-term gold price trend is volatile, and the risk of chasing higher is greater.
Wang Yanqing, chief researcher of precious metals at China Securities Construction Investment Futures, said 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 risks, and a short-term correction in gold may occur. In the long run, the U.S. monetary policy is the trend of the times from tight to loose, superimposed by increased geopolitical risks, central banks are continuing to increase their holdings of gold, and the gold market will still be easy to rise and fall.
Cao Liulong, chief strategy officer of Founder Securities, said that the gold price of the Fed's "interest rate hike" cycle generally falls, but the gold price of this round of "interest rate hike" cycle continues to rise sharply, which means that the traditional gold analysis framework is invalid. The acceleration of de-globalization has led to the widening of the "dollar credit rift", which is the anchor of the recent "soaring" gold price. Gold is the most extreme "scarce asset", and the price center has begun to move upward. Once the "petrodollar" collapses, it will be difficult to rebuild, and there may be an era of "national strife" without a single reserve currency in the future, and gold is expected to start a decade of bullishness.