Since the beginning of this year, the price of gold has continued to rise and set a new historical record. According to the latest data, the gold price of retail jewelry in Chow Sang Sang, Chow Tai Fook and other stores continued to climb to 720 yuan/gram after breaking through 700 yuan/gram before. In the latest trading day, the prices of Shanghai gold, COMEX gold, and London gold also continued to rise and set a new historical record.
At the same time, the annual return of gold-themed funds has also risen, with 34 funds (shares calculated separately, the same below) returning more than 10% during the year. In the view of industry insiders, there is more room for gold prices to rise in the future, and it is more likely that the international gold price will rise to $2,500 / ounce. At the same time, the price of RMB-denominated retail gold rose to 800 yuan/gram or a high probability event, and Shanghai gold is expected to rise to 600-650 yuan/gram.
Image source: Chow Sang Sang
The gold price continues to break all-time records
Since the beginning of this year, gold prices have repeatedly hit new highs, and the price of gold jewelry has continued to rise after breaking through 700 yuan/gram before. A reporter from Beijing Business Daily noticed that on April 7, the pure gold price (gold jewelry) of Chow Sang Sheng's store was 719 yuan/gram, which was also a new high after the pure gold price of his store broke through 700 yuan/gram on April 3. On the same day, the price of Chow Tai Fook's pure gold (jewelry, handicrafts) was also as high as 718 yuan/gram. Overall, the retail gold price is gradually approaching 720 yuan/gram.
While the price of gold jewellery is rising, the price of Shanghai gold and international gold has also continued to rise. According to the official website of the Shanghai Gold Exchange, as of the close of April 3, the price of Shanghai gold exceeded 540.7 yuan intraday, setting a new historical record, and the closing price of Au99.99 was 537.5 yuan / gram.
On April 5, the prices of COMEX gold and London gold also exceeded 2,300 US dollars / ounce, reaching as high as 2,350 US dollars / ounce and 2,330.13 US dollars / ounce, setting a new historical record. As of the close of trading on April 5, the latest prices of COMEX gold and London gold were $2,349.1 per ounce and $2,329.44 per ounce respectively.
As for the reasons for the recent continuous rise in gold prices, Wang Xiang, fund manager of Bosera Gold ETF, said that the main driving force comes from the gradual decline of the U.S. economy, the easing of monetary policy is expected to lead to the dual support of the U.S. dollar and U.S. bond interest rates, and the fierce geopolitical game will also maintain the safe-haven demand for gold assets at a high level. The influx of funds from trend traders was also an important factor in extending gold's gains.
Yang Delong, chief economist of Qianhai Open Source Fund, also mentioned that the continuous rise in gold prices is mainly related to four factors. First, the international situation is turbulent and has a long-term trend, which has led to an increase in international risk aversion, thereby driving up gold prices; second, the Fed is expected to cut interest rates; third, many central banks, including the People's Bank of China, have continued to increase their physical gold reserves in recent years, thereby increasing gold demand; and fourth, financial factors have boosted.
On April 7, the People's Bank of China (PBoC) announced its official asset reserves at the end of March 2024. According to the data, as of the end of March 2024, the mainland's gold reserves were 72.74 million ounces, compared with 72.58 million ounces at the end of February, which is also the 17th consecutive month that the People's Bank of China has increased its gold reserves.
34 thematic funds have yielded more than 10%
While the price of gold continues to rise, the annual returns of gold-themed funds have also risen, and the recent net inflows of some products have also been considerable.
Flush iFinD data shows that as of April 7, the average annual return of 40 gold-themed funds was 10.9%, of which 34 gold-themed funds had an annual return of more than 10%, and Yongying CSI Shanghai-Hong Kong-Shenzhen Gold Industry Stock ETF topped the list with an annual return of up to 26.94%, and the rest of the products also had an annual return of more than 6%.
If you look at the net inflow in the past five trading days, the data shows that from March 28 to April 3, the net inflow of domestic gold ETFs exceeded 3 billion yuan. Among them, the net inflow of Huaan Yifu Gold ETF also led the rest of the products by 1.415 billion yuan. Since March, the inflow of domestic gold ETFs has also exceeded 1.5 billion yuan.
In Wang Xiang's view, the continuous rise in gold prices in recent times has greatly activated investors' trading sentiment. However, there has been no significant change in the net position of overseas ETFs and COMEX funds, and the deviation of short-term price increases is also at a historically high level. Compared with a variety of domestic gold investment methods, gold ETFs have unique advantages in terms of threshold, transaction cost and convenience, so they are also a type of gold investment category that has increased significantly in scale in the past few years.
Gold prices are expected to continue to climb
At a time when gold prices continue to rise, the follow-up trend of gold prices has also become the focus of market attention. Previously, in February, Citi North American commodity analysts predicted that the international gold price could soar to $3,000 per ounce in the next 12 to 18 months. Now, how do industry insiders view the subsequent trend of gold prices?
Wang Hongying, president of the China (Hong Kong) Financial Derivatives Investment Research Institute, believes that from the combination of the international situation and the Federal Reserve's high probability of interest rate cuts, the future gold price has more room to rise, and the international gold price is more likely to rise to 2,500 US dollars / ounce. At the same time, the price of RMB-denominated retail gold rose to 800 yuan/gram or a high probability event, and Shanghai gold is expected to rise to 600-650 yuan/gram.
From the perspective of income, Ding Luming, chief analyst of large asset allocation at China Securities Securities, mentioned in the recently released research report "Gold May Surpass U.S. Stocks: When Inflation Starts Again" that the current round of inflation and asset price trends are very similar to the first wave of high inflation in the 70s of the 20th century, and there are signs of rising U.S. inflation 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.
However, some people in the industry remind us to pay attention to investment risks. Wang Xiang said that the unique advantage of gold assets is that under different macro scenario paths, the certainty of gold assets benefiting is relatively high, and there is only a difference in odds. If the subsequent resonance of commodity prices increases, triggering the risk of secondary inflation in Europe and the United States, gold assets with current trading easing expectations may face a certain short-term adjustment, but due to the limited room for further tightening by the Federal Reserve, under the logic of inflation, the downside of real interest rates will be opened, and the odds of gold assets will further rise.
Beijing Business Daily reporter Li Haiyuan