The precious metals, which continue to soar, have finally been pressed the pause button and have begun to fall sharply, and the price of gold can still fall?
(1) This week's views
We know that under normal circumstances, the trend of gold futures mainly revolves around the three main lines of US inflation, European and American economic levels and the stability of the financial system, and gold is usually regarded as a safe haven.
2023 is considered a year of significant success for gold
,
Gold achieved a return of more than 14%. Although gold was under pressure last year due to strong U.S. economic data and concerns about further interest rate hikes by the Federal Reserve, U.S. Treasury rates and the strength of the U.S. dollar; But
Gold demand is intense
The increase can be attributed to geopolitical tensions in the Middle East, as well as expectations that the Federal Reserve will slow down its tightening of monetary policy this year.
As gold is a hedge against inflation and political and economic uncertainty, the rise in inflation is supported by high inflation, an election year and geopolitical uncertainty in the Middle East and Europe.
Since October 2023, gold has hit record highs several times, and the absolute value of global gold reserves has generally shown an upward trend, which has supported the rise in gold prices in the past six months. Heightened geopolitical risks, including in the Middle East and Ukraine, as well as central bank purchases of gold, contributed to the rally in gold prices; At the same time, the global consumption of gold jewellery has increased significantly in recent months, which also supports the rise in gold prices. The surge in gold prices has triggered a domino effect, and silver has even risen more than gold since March, but it has begun to fall sharply in recent days.
As inflation remains resilient, the market has recently begun to reassess the Fed's timeline for a possible rate cut. Fed Chair Jerome Powell also stressed last week that it may take longer than expected to gain the confidence needed to cut interest rates. The president of the Richmond Fed also pointed out that domestic demand remains strong and the Fed has to reschedule its first rate cut.
Since the beginning of April, gold has been ignoring the rise in US Treasury yields and the general strength of the dollar index. However, if geopolitics eventually takes a back seat, gold could come under bearish pressure, and investors will adjust their positions in anticipation that the Fed will keep policy unchanged in June.
In the past week, the labor indicators released by the United States once again showed the resilience of the economy, in addition to the US economic data, Fed officials were intensively dispatched, but almost all of the speeches were hawkish, that is, denying that interest rates would be cut as soon as possible, and even saying that interest rate hikes were still possible.
Recently, due to the impact of the situation in the Middle East, the global financial market has experienced a major fluctuation and has shown an unexpected shape. Looking ahead to this week, the inflation gauge PCE is bound to be in the spotlight of the market.
For the gold market outlook, Xiao Chu believes that the gold market has undergone a fundamental turning point recently, and the probability of a technical decline is relatively large. Therefore, it is recommended that you continue to hold short orders. Personal opinion, FYI!
(2) Market review
Last week, the international gold price opened at 2369.4 US dollars / ounce, the highest price was 2433.3 US dollars / ounce, the lowest price was 2340.2 US dollars / ounce, and the closing price was 2406.7 US dollars / ounce, up 46.5 US dollars, or 1.97%. It is the fifth consecutive week of gains.
In the past week, the main domestic Shanghai gold futures contract opened at 570.42 yuan/gram, the highest price was 588.28 yuan/gram, the lowest price was 555.5 yuan/gram, and the closing price was 568.3 yuan/gram, down 2.2 yuan/gram, or 0.39%. The weekly surge fell back, the first weekly decline in recent times. The main opening price of silver was 7497 yuan/kg, the highest price was 7790 yuan/kg, the lowest was 7296 yuan, and the closing price was 7418 yuan/kg, down 0.72%.
Precious metals fell sharply on Monday!
(3) Fundamental dynamics
(1) Weekly news:
Gold futures rose for a third straight day on Monday as the Middle East conflict entered a new phase, as geopolitical tensions triggered safe-haven inflows into the gold market.
Gold futures rose for a fourth straight day on Tuesday as ongoing tensions in the Middle East prompted traders to snap up safe-haven assets, leaving markets largely ignoring the impact of a stronger dollar and uncertain prospects for interest rate cuts.
Federal Reserve Chair Jerome Powell said on Tuesday that it may take longer to gain confidence that inflation is moving toward the Fed's target, following recent inflation data that has consistently exceeded market expectations. The Fed chair also said it would be appropriate to give the Fed's restrictive monetary policy time to play a further role. After Powell's speech, US Treasury yields rose to new 2024 highs and the dollar rose.
In an article published on social media by Krishna Gopaol, an investment research analyst at the World Gold Council, the Reserve Bank of India (RBI) continued to buy gold in March. So far this year, the RBI has bought nearly 19t of gold, surpassing the net purchase of 16t for all of 2023.
Deutsche Bank forecasts that the gold price will reach US$2,400 per ounce by the end of 2024 and US$2,600 per ounce by the end of 2025.
Gold futures on the Chicago Mercantile Exchange (COMEX) fell on Wednesday, ending a four-day winning streak but still near all-time highs. Weakening expectations of a Fed rate cut have masked the growth in safe-haven demand from geopolitical turmoil in the Middle East.
Gold shipments from the Shanghai Gold Exchange (SGE) were 124t in March, down a slight 3t from February, as surging gold prices dampened demand. However, Q1 upstream physical gold demand rose to its highest level since 2019 at 522t.
Gold futures rose on Thursday, as continued tensions in the Middle East added to the appeal of safe-haven gold, despite strong U.S. economic data that undermined expectations of a rate cut by the Federal Reserve.
Swiss gold exports fell month-on-month in March, as exports to Chinese mainland and Hong Kong increased, but exports to India and Turkey declined, customs data released on Thursday showed.
Gold futures rose on Friday, rising for the fifth straight week, as fears of Iran and Israel retaliating against each other have led to heightened tensions in the Middle East, prompting investors to pour into safe-haven assets.
(2) Gold ETFs and the U.S. Dollar Index
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As of April 19, the gold ETF holdings increased by 4.32 tons from the previous day, and the current position is 831.91
Ton.
We know that the US dollar and gold, as global safe-haven tools, have a strong mutual substitution relationship, and in the medium and long term, the two show a negative correlation. Because gold is denominated in US dollars, the strength of the dollar index has made gold more expensive for overseas investors, and the rise in the dollar has also weakened gold's appeal to buyers holding other currencies.
Over the past week, the U.S. dollar index extended its rally and rebounded slightly. The opening price of the week was 106.01, the highest intraday price was 106.51, and the lowest was 105.74; It ended the week at 106.11, up 0.08%.
Important: The information contained herein is derived from publicly available information and is not guaranteed to be accurate or implied in terms of accuracy, reliability, timeliness and completeness. The views and information published in this article are for investors' reference only and do not constitute investment advice to anyone. The risks and returns of futures are relatively large, please participate cautiously, sincerely apologize for the inconvenience caused to you, thank you for your understanding and cooperation!