The international gold price has indeed risen to record highs. At present, the international gold price has exceeded 2,300 US dollars per ounce, and the domestic gold price has exceeded 540 yuan per gram. If you go to a domestic gold store, you will find that the listed price for sale has exceeded 710 yuan per gram.
Many industry insiders and experts believe that the international gold price has seriously exceeded the normal fluctuation value, and now all countries are issuing credit currencies, including the US dollar, which means that gold has no longer become the need for countries to issue currencies. But we can all agree that Sartre said: what exists is reasonable. So there is a certain rationality in the continuous rise in gold prices during the current period.
So why has gold risen so sharply recently? In fact, it is affected by the three most important factors in the world, and if these factors are not eliminated, then gold's strong price position will be maintained.
1. It was previously predicted that the Fed would enter the channel of interest rate cuts in 2024, but now the variables will become more and more variable. At the beginning of the year, it was predicted that the Fed could cut interest rates up to seven times in 2024, to around 3.5%. Expectations are constantly being revised, especially the latest Fed attitude. Wall Street is currently forecasting that there could be up to three cuts, and even hinting that there may be no rate cut at all.
Now the U.S. federal funds rate index is as high as 5.25%~5.5%, if interest rates continue not to be cut, in fact, most countries in the world will have to bear the negative impact of U.S. inflation. In this case, the world's demand for gold will naturally increase.
Second, international geopolitics is very unstable and getting worse. The conflict between Russia and Ukraine has not shown signs of improvement, and the situation in the Middle East continues to be tense, involving more and more countries and regions. At the same time, the various viruses affecting the world's people are still raging, and the top two countries in the world economy are only beginning to show signs of easing. This greatly strengthens gold's function as a safe-haven currency.
Third, the purchasing power of the US dollar continues to decline, so the international gold price denominated in US dollars will naturally rise. Inflation in the United States is still above 2% and is likely to rise, which is why the Fed's determination to cut interest rates has been delayed. However, the excessively high inflation rate in the United States has forced the purchasing power of the dollar to continue to decline. Gold is trading at the US dollar, which naturally rises and remains high globally.
However, it is especially reminded that the international gold price is only 540 yuan per gram in RMB, and the gold listing price of domestic gold stores has exceeded 710 yuan, and the difference has reached 140 yuan, which has appeared since the second half of 2022, which is also a very abnormal phenomenon.
Generally speaking, the difference between the listing price of the gold store and the international gold price is about 70~100 yuan. The emergence of such a large price difference also indicates that the domestic gold market is in an irrational state. So buying gold right now isn't necessarily a good choice. If you really need gold, you may go to the bank's accumulation fund activities, or buy the bank directly to invest in gold bars, they will be more positioned by the national gold price.
Is there a direct correlation between the rise in the international gold price and the decline in domestic housing prices? In fact, the correlation is not large. Such a change in the international gold price is related to the three major factors mentioned above. The fluctuation of domestic housing prices is mainly related to the adjustment of the mainland economy, and the adjustment of the mainland's economic system has not been completed. Our domestic situation has little to do with the dollar, gold and international politics.
At the same time, the mainland real estate industry is also in the process of bottoming, if nothing else, the first-tier real estate may stabilize this year, and then the core cities, regional central cities and provincial capitals will gradually stabilize. At that time, for small counties and small cities with oversupply, it may still take a long time to continue to adjust the price in place.
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