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As a safe-haven asset, gold typically excels in times of economic instability or geopolitical tensions. The recent rebound in US inflation data and heightened geopolitical tensions have supported gold prices. And as global economic uncertainty increases, so does investor demand for gold.
On April 16, the gold price of Lukfook Jewellery was 726 yuan/gram, breaking through the 700 mark. After the gold price hit new highs, there was strong demand for gold realization. Recently, the reporter visited the gold consumer market to understand the price of major gold jewelers recycling prices, China's gold bar recycling price has exceeded 550 yuan/gram, and some jewelry gold recycling prices have exceeded 600 yuan/gram.
Analysts believe that the recent strong demand for gold realization is mainly due to the rise in gold prices to stimulate high-level selling, and consumers should pay attention to comparing the realisation conditions and prices of different channels when cashing out gold, so as to maximize returns as much as possible.
The recent rebound in U.S. inflation, geopolitics and other factors have supported the rise in gold prices. However, as gold has been extremely overbought, gold prices may correct in the near future, and gold prices still have room to rise in the medium to long term.
Demand analysis for goldThe demand for gold is mainly divided into three aspects: consumption demand, reserve demand and investment demand. Consumer demand includes the demand for gold in the jewelry and industrial fields, and the speed and condition of economic development determine the industrial and residential consumption demand for gold. Reserve requirements are official gold reserves made by central banks to protect against financial risks. Investment needs include the purchase of products such as gold bars, coins and gold ETFs to meet investors' needs for storing and preserving value against inflation, economic recession and international geopolitical issues and other political, economic and financial issues
China is the world's largest gold producer
According to the statistics of the World Gold Council, the world's gold mining resources are distributed in many countries. In 2022, global mine production reached 3,627.72t, with China, Australia and Russia accounting for one-third of the global total. The top five major gold producing countries accounted for 45% of production. China is the world's largest gold producer, accounting for nearly 11% of global mine production in 2022, followed by Australia and Russia, which each accounted for 10%.
Gold industry chain combing
From the perspective of the industrial chain, the upstream of the gold industry is the exploration and mining of gold ore resources, which is limited by mineral resources, access qualifications and investment scale, and has the highest industry concentration. The midstream is the smelting and refining link, through the smelting and processing of gold concentrate and synthetic gold, it can be made into tradable standard gold products; The downstream is the demand scenario for various types of gold, mainly including gold jewelry, gold coins and bars, central bank reserve demand and various industrial fields. In addition, recycled gold is also an important part of the gold industry.
The production concentration of large gold enterprises has increased
According to the China Gold Association, between 2017 and 2022, the concentration of production in domestic mines by large mainland gold companies increased. In 2022, the gold output of large gold enterprises (groups) in domestic mines reached 148.066 tons, accounting for 50.12% of the national output. These enterprises give full play to their own advantages, through strong alliances, and actively promote mergers and acquisitions and resource mergers and acquisitions at home and abroad. For example, Zijin Mining has acquired a 30% stake in the Savayalton Gold Mine in Wucha County, Xinjiang, a 30% stake in the Haiyu Gold Mine in Shandong, the Rosebel Gold Mine in Suriname in South America, and a 20% stake in Zhaojin Mining.
In the first three quarters of 2023, the domestic mine mineral gold output of large domestic gold enterprises (groups) was 107.058 tons, accounting for 49.83% of the country.
Wang Lixin, CEO of the World Gold Council in China, said that gold is an important part of asset allocation for both institutional investors and individuals. However, the price of investment products must fluctuate, and there are also risks in the gold market.
Goldman Sachs said that since mid-2022, the main reason for the rise in gold prices has been driven by new incremental factors, in particular the acceleration of gold purchases by emerging market central banks and the increase in retail buyers in Asia. In addition, given that the federal funds rate is likely to be lower later this year, this could slow the headwinds for gold-backed ETFs, leaving the bullish bias on gold still evident. Goldman Sachs has raised its year-end gold price forecast to $2,700 an ounce, up from $2,300 previously.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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