Source: Photo.com
On April 22, gold, which has always been favored by the market, suddenly ushered in a sharp fall.
As of press time, spot gold in London fell 2.6% to $2,329 an ounce, and COMEX front-month gold futures fell nearly 3% to $2,343 an ounce. According to the data agency, this is the biggest one-day decline since at least June 2022.
Although gold fell more than 2% this time, the international gold price is still up more than 12% year-to-date, more than double the S&P 500's year-to-date increase (slightly more than 5%).
Central banks have been adding to their gold holdings over the past few years, with 2,100t of central bank reserves added to their reserves in 2022 and 2023 alone. By comparison, central banks have increased their holdings of gold by central banks over the past 14 years at 7,800t.
In this regard, senior gold analyst Mark Mead Baillie commented on Monday that the most perfect expression at present is still - gold is very overbought in the short term, but it is still seriously undervalued in the long term.
Mark said given that the recent resilience of the gold price comes from the new Middle East conflict, and that it has been proven over the years that gold's geographically induced price surge will be short-lived. He is wary that the price has reached a near-term peak.
Mark said there was something that "has to come at a price" given the IMF's recent reiteration of "unsustainable debt levels in the United States" and the global implications. So these negative perceptions (of gold) in the near term may not be meaningful in the long term.
Global demand for gold is growing strongly
According to statistics, in the first half of 2023, global gold demand reached a total of 2,460.1 tons. The downstream demand for gold can be divided into gold jewelry, industrial applications, gold coins and gold bars, gold ETF investment demand and central bank reserves. According to statistics from the USGS, jewellery is the largest consumer market for gold, accounting for 47% of demand in 2022. This is followed by central bank reserves, accounting for 20%.
Panorama of China's gold industry chain
At present, there are many participants in the gold industry in mainland China, and the participating enterprises are basically comprehensive enterprises, and most of the gold enterprises such as CICC Gold, Hunan Gold, Shandong Gold and Chifeng Gold are involved in gold mining, smelting and processing.
Market concentration in China's gold industry
Overall, the market concentration of the mainland gold industry is relatively high. In 2022, the gold production concentration of the top three companies in the mainland gold industry was 38.11%, the gold production concentration of the top five companies was 51.39%, and the gold production concentration of the top ten companies was 62.44%.
In their latest report in early April, Citi analysts predicted a price target of $3,000 for gold over the next 6-18 months. With global debt levels ballooning to $315 trillion, retail investors, family offices and the very wealthy are spurring enthusiasm for gold, analysts said.
The World Gold Council believes that strong global investment demand for gold, heightened geopolitical risks and rising investor futures market positions are all drivers of gold's strength.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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