Gold prices soar, is gold really hard currency?
Preface
Recently, affected by multiple factors such as the re-intensification of the global epidemic and the rise of geopolitical tensions, the international gold price has once again ushered in an upward trend, once breaking through the important mark of $1,800 per ounce, hitting a new high in several months. In this context, the domestic gold price has also shown a clear upward trend, which has attracted the attention of many investors and market participants.
The fluctuation of gold prices has always attracted the attention of the market, and in the process of this gold price rise, many people have begun to discuss the characteristics of gold as a safe-haven asset, believing that it can maintain its value and resist losses when the global economic uncertainty increases, thus becoming a hard currency. So, is gold really hard currency? What factors affect its price? And how to rationally look at the fluctuation of gold prices?
First, gold prices soared, and gold became the focus again
Recently, affected by factors such as the deterioration of the global epidemic situation and the rise of geopolitical tensions, the risk aversion in the international market has increased significantly, and as one of the important safe-haven assets, gold has naturally become the first choice for the market, and its price has once again ushered in a rising trend.
Up to now, the international gold price has maintained an upward trend for many days, once breaking through the important mark of $1,800 per ounce, setting a new record for several months. In this context, the domestic gold price has also shown a clear upward trend, which has attracted many investors.
Some people believe that this is mainly due to the impact of the global epidemic situation, and the re-aggravation of the epidemic has had a certain impact on the market's expectations for global economic recovery, which has stimulated risk aversion and promoted the rise of gold prices.
Some people believe that in addition to the epidemic factor, the rise of geopolitical tensions is also one of the important reasons for the rise in gold prices, such as the recent escalation of the conflict between the United States and Iran, and the United States has also carried out military strikes on Syria, which have made the market worry about the development of the geopolitical situation, which has stimulated risk aversion and promoted the rise of gold prices.
Regardless of the factors, the rise in gold prices has undoubtedly had a significant impact on market participants, and has also led to some speculation about the characteristics of gold as a safe-haven asset.
Second, the price of gold fluctuates, is gold a hard currency?
In the process of rising gold prices, many people began to discuss the characteristics of gold as a safe-haven asset, believing that it can maintain its value and resist losses when global economic uncertainty increases, thus becoming a hard currency.
The so-called hard currency refers to the fact that it can still maintain relatively stable purchasing power and is not easily affected by inflation, but can resist inflation and maintain its value under the condition that the amount of money issuance continues to expand and the inflationary pressure increases.
In contrast, paper money is a soft currency, the amount of which is completely controlled by the authorities and the central bank, and can be printed on a large scale at any time if the authorities need it, which can lead to inflation and thus weaken the purchasing power of the renminbi.
Under such a definition, gold does seem to have the characteristics of hard currency, and its price is affected by supply and demand and market fundamentals, and cannot be expanded at will, so when global economic uncertainty increases, investors tend to transfer funds to the gold market for hedging, thus driving the rise in gold prices.
Moreover, in the long run, whether it is inflation or deflation, gold can maintain a relatively stable value, and its purchasing power is not susceptible to inflation, so to a certain extent, gold can indeed be considered to have the characteristics of hard currency.
3. Gold price fluctuations are affected by multiple factors
The fluctuation of gold prices is not affected by only one or two factors, its price is affected by a combination of multiple factors, including the global economic situation, geopolitical risks, the US dollar exchange rate, etc.
Generally speaking, when the global economy faces greater downward pressure, the market's risk concerns will increase, and risk aversion will rise, at which time investors will transfer funds to the safe-haven asset market, thus driving the rise in gold prices.
It is geopolitical risks, whether it is tensions in the Middle East or contradictions between the United States and other countries, which may have a certain impact on the global economic situation, which stimulates risk aversion and pushes gold prices higher.
It is the US dollar exchange rate, the US dollar as the world's main reserve currency, its exchange rate fluctuations will also have a certain impact on gold prices, generally speaking, a strong dollar will suppress gold prices, and a weaker dollar will push gold prices up.
Fourth, how to look at the fluctuation of gold prices rationally?
As investors and market participants, how should we rationally view the volatility of gold prices?
To fully understand the various factors behind the fluctuation of gold prices, whether it is the global economic situation or geopolitical risks, may have a certain impact on gold prices, only by understanding these factors, can we better grasp the trend of gold prices.
According to their actual situation, they should treat the fluctuations of gold prices rationally, whether the gold price rises or falls, they should not blindly follow the trend, but should combine their own investment needs and risk appetite to make rational investment decisions.
Whether the price of gold rises or falls, we can invest through gold ETFs, gold futures and other tools, so as to maintain and increase the value of assets.
epilogue
The fluctuation of gold prices has always attracted the attention of the market, and in the process of this gold price rise, many people have begun to discuss the characteristics of gold as a safe-haven asset, believing that it can maintain its value and resist losses when the global economic uncertainty increases, thus becoming a hard currency.
Whether gold is really hard currency or not, in fact, it is not so important to us, it is important to fully understand the various factors behind the fluctuations of gold prices, rationally look at the fluctuations of gold prices, and find investment opportunities from them to achieve asset preservation and appreciation, which is what we should do.
I hope that everyone can understand the fluctuations of gold prices through the introduction of this article, and also be able to make more rational investment decisions in the future investment process.