2024.0411

Number of words in this article:1929, the reading time was about 3 minutes

introduction：开市客的金条售价比现货金价高出约2%。

** Author| ** First Finance and Economics Fan Zhijing Ge Weier

According to recent estimates by Wells Fargo, retail customers sell monthly gold and silver bars to $100 million to $200 million.

As gold prices hit record highs, American people's enthusiasm for gold is also high. Recently, discussions on investment in precious metal jewelry on social media such as Reddit have continued to heat up. Since it began selling 1-ounce 24K gold bars last year, sales from opening customers have continued to surge. As gold bars are selling faster than replenishment, the discount giant added silver coins to its precious metals products in January this year.

On the other hand, international gold prices encountered obstacles after continuously setting record highs. The May contract of COMEX gold, the most actively traded on the New York Mercantile Exchange, fell nearly 1% intraday. Data showed that U.S. inflation in March was higher than expected, causing the Federal Reserve to shift or further delay monetary policy, suppressing buying confidence. However, for gold prices, in addition to interest rate expectations, the continued buying by global central banks, geopolitical risks and investors 'need to maintain value in an inflationary environment are all important supporting factors, and the market's long-short game is far from over.

Interest rate cut expectations frustrated

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A report released by the U.S. Department of Labor on Wednesday showed that the consumer price index CPI rose 3.5% year-on-year in March, up from a 3.2% increase in February. Core CPI (excluding food and natural gas prices) rose 3.8% year-on-year, unchanged from February and also higher than market expectations.

Since the beginning of this year, the anti-inflation trend seems to have stalled as energy and raw material prices have pushed commodity deflation to turn, and inflation in the service industry remains high.

Many Fed officials have frequently issued tough warnings about policy prospects. In an interview with the media this week, Atlanta Fed Chairman Bostick reiterated his expectation of cutting interest rates once this year. Minneapolis Fed Chairman Kashkari and Federal Reserve Governor Bowman did not rule out the possibility of not doing anything this year.

▲ 美元指数创年内新高

After the inflation report was released, the US dollar index rose sharply, rising 1% during the day and breaking through the year's high of 105. The yen fell below the important psychological level of 152 against the U.S. dollar, which is seen by the outside world as a bottom line for the Bank of Japan and may trigger intervention to support the yen. The euro, British pound and Swiss franc fell more than 1.1% against the US dollar. Federal funds rate futures showed investors turned to betting that the Fed would cut interest rates by 25 basis points for the first time at its September meeting, rather than June or July, and the room for rate cuts this year was further compressed to less than twice. Nationwide chief economist Kathy Bostjancic wrote:"The lack of progress in inflation will undermine the confidence of Fed officials that inflation is sustainably returning to 2%, with interest rate cuts postponed until as early as September and possibly until next year."

There are other concerns about buying

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It is worth noting that in addition to interest rates, there are also geopolitical risks that have pushed gold prices up by more than 10 per cent this year. Gold is an important way to preserve the value of assets during periods of turmoil. Although there have been frequent reports of cease-fire negotiations recently, the conflict between Russia and Ukraine and the Middle East is still unresolved. On the other hand, more than 60 countries and regions around the world will hold general elections this year, including the most eye-catching United States. HSBC said in a report that it expects gold to trade in a range of between $1975 and $2500 in 2024. "the escalation of geopolitical risk has greatly supported gold, as the risk thermometer remains high because of the hot conflict and the record size of this year's election." At the same time, the dollar's position in the global reserve currency has been declining in recent years, and the potential risk of a US debt default is being closely watched. JPMorgan believes that more and more countries are keeping their assets flexible and healthy by increasing their holdings of gold and reducing their holdings of dollars. 'Central banks have been one of the factors driving up the price of gold, 'wrote Paul Wong, a market strategist at Sprott asset management. According to the World Gold Council, total gold demand by central banks in 2023 was 1037.4 tons, slightly below the record high of 1081.9 tons set in 2022 and exceeding 1000 tons for two consecutive years. Since the beginning of this year, the pace of gold purchases by various countries has continued. Ross Norman, chief executive of Metals Daily, noted that de-dollarization was an ongoing theme or concern as the West tightened sanctions in the wake of the conflict between Russia and Ukraine, the weaponization of the US dollar and restricted access to its payment networks. "the BRICS group and other developing countries are likely to feel nervous and transfer their reserves to gold to balance risks." He added.

The popularity of individual investors remains undiminished

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Behind the new round of gold price rise, individual investors can not be ignored. Looking back, gold did well in the 1970s, when it was at a time of high inflation, with an average annual return of 30.7%, well ahead of the s & p 500. During the epidemic, gold performed equally well in all asset classes, making it a choice for investors to deal with price risks. UBS raised its international gold price target to $2500 this week and predicted retail purchases would be the next catalyst. Once the Fed starts cutting interest rates this year, holdings of gold exchange traded fund ETF should start to rise, as buyers tend to be more synchronized with interest rate adjustments. ETF holdings are at their lowest level in four years. " Physical gold is also sought after. In Turkey, where inflation was close to 70 per cent in March, the central bank announced on the 21st of last month that it would raise interest rates by 500 basis points to 50 per cent. In the face of severe inflationary pressure and the devaluation of the lira, people have chosen to buy gold jewelry. Turkey's demand for gold bars and coins soared 88% in 2023, with an annual return of 82%, according to the World Gold Council. Frenzied demand has pushed up market premiums and led to a surge in gold smuggling at the border. According to reports, affected by the domestic quota system, the price of gold per kilogram in Turkey is 2000 to 3000 US dollars higher than the international benchmark, with a premium rate of more than 7 per cent. Edward Kelly, equity analyst at Wells Fargo, said in a research note that sales of precious metal products rose in part because of its "positive pricing and a high degree of customer trust". According to Wells Fargo, the price of gold bars sold at the opening of the market is about 2% higher than the spot price.

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