Gold "shines", investment "tops"

Gold "shines", investment "tops"

Witness history and become the key word of gold.

Since March 2024, spot gold prices have continued to rise, and domestic and foreign gold prices have refreshed historical records many times, and then have been fluctuating at historical highs, becoming the "favorite" of capital.

Against this backdrop, where do investors go from here?

Gold "shines", investment "tops"


Why is it crazy

The gold market is so lively.

Mainstream media reported that the price of gold jewellery of offline brands has not stopped, with the price around 730 yuan/gram, which has also ignited the enthusiasm of consumers, showing a momentum of buying more and more, and data from the China Gold Association shows that the consumption of gold in mainland China will reach 1089.69 tons in 2023, a year-on-year increase of 8.78%, which can also support this phenomenon.

However, some consumers said that "I don't plan to start at the moment, it's too high, I'd rather miss it than dare to go in, and I can't earn money other than I know."

Gold "shines", investment "tops"

There are two reasons behind the price of gold.   

On the one hand, central banks are constantly buying.

According to the World Gold Council, global central banks bought 450t of gold in 2021, 1,082t in 2022 and 1,037t in 2023, bringing central bank purchases to 25% to 30% of global gold demand in 2022-2023.

Gold "shines", investment "tops"

Specifically, as of the end of March 2024, China's gold reserves were 72.74 million ounces, compared with 72.58 million ounces at the end of last month, and it has increased its gold reserves for 17 consecutive months.

"Since the beginning of 2024, gold has reached a new high, and central banks and investors have a deeper consensus on the strategic allocation value of gold, and gold has seen a premium," China Securities Construction Investment said. ”

On the other hand, it is due to the need for hedging.

There has been a subtle change in US inflation, and interest rate cuts may be delayed, which means that European and American banks are under pressure under high interest rates, and capital markets are worried about potential systemic risks, which leads to high risk aversion.

Gold "shines", investment "tops"

Coincidentally, gold is naturally the "hard currency" of the world.

In this context, global funds have invariably poured into gold futures, pushing gold higher step by step.

Bosera Fund said: "The main driving force for the rise in gold prices 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. Treasury interest rates, and the fierce regional game will also maintain the safe-haven demand for gold assets at a high level." After gold broke out of the three-year trading range, the participation of trend traders was also an important factor in extending gold's gains. ”


There are differences in the market outlook

It should be noted that the market has mixed opinions on the future of gold.

One voice believes that the rally is not over yet.

Increasing the holdings of gold has become the consensus of central banks, and the rigidity of consumption is superimposed, and the upward probability of gold is greater than the downside probability, and it is not ruled out that it will continue to rise in the future, even to $3,000.   

David Rosenberg, president of Rosenberg Research, said: "The rally could push gold to $3,000 before the next business cycle shifts, and the likelihood of gold reaching $3,000 an ounce is far greater than the probability of falling back to $1,500 an ounce." ”

Gold "shines", investment "tops"

Another voice believes that it is difficult to continue the rally.

The short-term price increase is higher, there are more profit-taking orders, investors become cautious at a high level, and emotional fluctuations have a greater disturbance to short-term prices, and the possibility of a pullback cannot be ruled out.

The two voices cannot be divided between right and wrong, but the related investment risks cannot be ignored.

Taking China Gold as an example, the operating income in 2022 will be 47.12 billion yuan, a year-on-year decrease of 7.16%, a net profit of 765.3 million yuan, a year-on-year decrease of 3.66%, and a gross sales margin of 3.90%, and an operating income of 41.31 billion yuan in the first three quarters of 2023, a year-on-year increase of 15.76%. The net profit was 940.8 million yuan, a year-on-year increase of 20.66%, and the gross sales margin was 4.23%.

This result is not in line with Volkswagen's expectations.

Gold "shines", investment "tops"

In addition, it is also necessary to pay attention to the investment risk of gold stock ETFs, which may be harvested by arbitrage funds.

All in all, gold is cyclical, although the current spirit, but the price will not only rise or fall, there must be a certain risk management expectations, gold has been "bearish" many times in history, the most recent is from March to early November 2022, the price of gold plummeted from $2078 / ounce to $1618 / ounce, falling for 7 consecutive months, setting the largest consecutive decline since 1968.

From this point of view, there should be certain risk management expectations.           

This article represents a personal opinion only and has nothing to do with this newspaper. The stock market is risky, investment needs to be cautious, this article is for reference only, the actual profit and loss is at your own risk.

Postal Code: 77-19

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Editor|Zhang Yi

Audit|Wu Xin

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