The gold price, which has been "soaring" all the way, ushered in a sharp fall.
After the previous day's sharp decline, gold prices continued their downward trend on April 23, and spot gold briefly fell below the $2,300 per ounce mark intraday.
On April 22, spot gold in London fell 2.72% to $2,326.81 per ounce, the biggest one-day drop in nearly two years. During the session, spot gold fell by more than $60 per ounce, falling below multiple integer thresholds in a row. COMEX gold futures fell 3.01% to $2,341.1 an ounce.
Interviewees believe that when the gold price continued to rise before, the market had a certain fear of heights, and the risk of chasing higher was greater. However, after the price of gold begins to fall, the more crowded long trading will gradually ease, and in the context of the long-term upward logic has not changed, you can wait for the pullback to bring better allocation opportunities.
Gold prices plummeted
In the international market, spot gold briefly fell below the $2,300 per ounce mark on April 23.
The domestic gold price also "changed overnight". On the disk, the main 2406 contract of intraday gold futures on the Shanghai Futures Exchange closed at 544.84 yuan, down 3.54%, with a trading volume of 241,300 contracts and a position of 149,700 contracts. Gold T+D on the Shanghai Gold Exchange closed down 3.05% at 543.63 yuan per gram during the day.
In terms of jewelry gold prices, the retail gold prices of many jewelry brands have been lowered by about 14 yuan, and the news that "gold jewelry prices fell by 14 yuan per gram overnight" has also appeared on the hot search. For example, the price of pure gold jewelry in Chow Tai Fook on April 23 was 719 yuan/gram, compared with 733 yuan/gram the day before, down 14 yuan/gram overnight.
Why the callback
The reporter of "International Financial News" interviewed several analysts and learned that the recent decline in gold prices may be caused by many factors.
First, the probability of U.S. interest rate cuts has been decreasing again and again. Wang Weimang, investment manager of the asset management department of Zhonghui Futures, pointed out that the data shows that the probability of the Fed cutting interest rates has decreased, and the relevant statements are aggressive.
In terms of specific data, the number of non-farm payrolls in the United States surged by 303,000 in March more than expected, the largest increase in 11 months. The U.S. consumer price index (CPI) rose 3.5% year-on-year in March, and the core CPI rose 3.8% year-on-year, with all CPI sub-items exceeding expectations. Meanwhile, the U.S. producer price index (PPI) also rose 2.1% year-on-year in March, surpassing the previous month. In addition, the Institute for Supply Management (ISM) manufacturing index in the United States stood above the boom-bust line of 50 in March, which was significantly better than expected.
Wang Jun, president of the Founder Mid-term Futures Research Institute, told reporters that under the continuous hawkish remarks of the Federal Reserve authorities, the market expectation of interest rate cuts has been further postponed, and the current market expectation probability that the Fed will not cut interest rates in September is nearly 58%.
"The rebound in U.S. inflation and the postponement of Fed rate cut expectations also pose a potential negative for gold prices. Xu Ying, chief macro analyst of the Orient Securities Derivatives Research Institute, said.
Second, the risk premium for conflict in the Middle East has receded. On the news side, Israel is suspected of a surprise attack on Iran, and Iran's nuclear facilities have not been damaged. While Iran denied a foreign attack, Israel declined to comment, and the United States said it had been notified of the attack. The Israeli defense minister had a phone call with the US secretary of state to seek to avoid US sanctions, and Iran responded that Israel had received the necessary response at this stage, and its attack was insignificant. According to Wang Weimang's analysis, it is obvious that Iran does not have the ability or the will to expand the geopolitical problem. This is despite the fact that the current war between Israel and Hamas continues.
Wang Jun said that the geomilitary conflict in the Middle East that has been fermenting for nearly a month has not further intensified and brought about the far-reaching impact expected by the market, and the demand for precious metals as a safe haven has gradually weakened.
Xu Ying also pointed out that the recent gold price peaked and fell, and began to fall significantly on April 22, mainly because the geopolitical risks in the Middle East did not heat up further, the market's risk aversion weakened, and gold rose more than 15% since March.
The third is the excessive trading of the gold market. According to Wang Weimang's analysis, the historical quantiles of non-commercial longs and net longs in the gold futures market have reached 89% and 87% recently, and the implied volatility of options has also continued to rise to 15.3%. Although the bullish factor still exists, the short-term rapid rally consumes more, and there is a need for technical adjustment on the disk.
In addition, the world's large gold ETFs have reduced their holdings. In the past month, major institutions have continued to reduce their holdings of gold funds. According to the data provided by Wang Weimang to reporters, the world's largest gold ETF-SPDR Gold Trust has reduced its holdings by 6.6 tons of gold since March 20, iShares, the world's second largest gold ETF, has reduced its holdings of gold by 4.25 tons, and the world's largest silver ETF-SLV has reduced its silver holdings by 160 tons.
What is the market outlook
Is the decline in gold prices in recent days a short-term adjustment, or an inflection point for a sharp decline?
Wang Weimang believes that in order to judge whether the gold price adjustment will continue, it is necessary to understand the influencing factors of the gold market. This includes continued gold purchases by central banks, interest rate cuts by major central banks, and the expansion of geopolitical conflicts. "Although gold may continue to adjust in the short term, it is still bullish on gold in the long term, and it is expected that there is less chance of a big decline."
"The short-term gold price has entered a volatile consolidation phase, but it does not mean that gold's upward cycle is over. Xu Ying said that in the short term, the U.S. economic data is acceptable, the Federal Reserve's monetary policy is hawkish, and the geopolitical situation has not escalated, gold lacks upward momentum, but in the medium and long term, high interest rates + high inflation pose a downside risk to the U.S. economy, the volatility of the financial market is also increasing, the Fed's balance sheet shrinkage is facing adjustment, and monetary policy will eventually enter an easing cycle. In addition, under the trend of de-globalization, the importance of gold allocation is increasing, which forms the basis for gold's long-term rise.
Liu Dongmei, an analyst at Zhongtian Futures, pointed out that according to the data released by the IMF, in March 2024, Russia increased its gold reserves by 3.11 tons to 2,332.815 tons, while Oman is also increasing its gold holdings. From the perspective of gold reserves in various countries, the behavior of central banks to increase their holdings of gold continues, and the supply and demand situation of gold has not changed.
However, Liu Dongmei also said that there are still many uncertainties in the short term. High inflation in the United States, the delay in the timing of the Federal Reserve's interest rate cuts, boosting the dollar and Treasury yields, and increasing uncertainty about the path of future interest rate cuts have put pressure on gold prices. On the whole, in the absence of changes in fundamentals, the foundation for gold's long-term strength is still there.
Wang Jun also analyzed that in the short term, there is still obvious room for adjustment in gold prices, but in the long run, gold will return to the basic price trend dominated by the Federal Reserve's interest rate cut and central bank gold purchases.
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Xu Ying told reporters that investors' long-term outlook for gold is still optimistic. When the gold price continued to rise, the market had a certain fear of heights, and the risk of chasing higher was greater. However, after gold begins to fall, the more crowded long trading will gradually ease, and in the context of the long-term upward logic has not changed, you can wait for the pullback to bring better allocation opportunities.
Liu Dongmei believes that in the long run, global assets have entered a monetary easing cycle, global political and economic uncertainty has increased, market value preservation, investment demand has grown, and the central bank's increase in holdings and spot demand have all supported the further strengthening of gold prices in the future and have certain investment value.
Wang Weimang said that in terms of disk performance, gold has signs of three waves in the short term, and if it continues to adjust, Shanghai gold may be supported near 535. If the support is ineffective, it may be a five-wave structure. In the medium and long term, there is still a rhythm of strategic allocation. Short-term investors are advised to wait for the adjustment to stabilize before making a strategic allocation decision.
"Gold prices are likely to continue to decline for now. However, Wang Jun believes that in the medium and long term, precious metals are still the core. From a long-term fundamentals perspective, gold is still worth investing in. In the future, the Fed's monetary policy will still be loose, the geopolitical situation is still tense, global central banks continue to buy gold, and the global reflation trend is superimposed, and precious metals are still positive.
Wang Jun further pointed out that in the short term, London gold will focus on the $2,400 / ounce point above and $2,300 / ounce below, and $2,150 / ounce will still be an important support for the long-term down, and the medium and long-term market is still optimistic. In terms of London silver, the upper focus is on the $29 / ounce point, the lower focus is on the $27.5 / ounce point, and the $24.5 / ounce is still the long-term core support, and it is still emphasized that the silver adjustment is a buy long opportunity. Domestically, Shanghai and gold continue to pay attention to the pressure range of about 575 yuan to 580 yuan/gram, below the range of 555 yuan to 550 yuan/gram, 500 yuan to 505 yuan/gram is still an important long-term support, Shanghai silver above the pressure level of about 7500 yuan to 7700 yuan/kg, below the attention of 6700 yuan to 7000 yuan/kg.