Gold prices have plummeted again!
After a significant drop in international gold prices on November 6th, international spot gold continued to decline on the 12th, falling to $2590.30 per ounce during trading.
At the same time, the retail prices of domestic gold and foot gold also fell in response. Chow Sang Sang quoted 788 yuan per gram, a drop of 14 yuan overnight from 802 yuan per gram the previous day.
What is the reason for the continuous decline in gold prices? Will the 'plunge' in gold prices trigger a wave of gold monetization? Does this mean that gold has entered a turning point in the downward trend?
Multiple factors combined to cause a decline in gold prices
Visiting scholar Bian Yongzu from Yale University pointed out in an interview with China News Service that the current decline in gold prices is mainly influenced by the results of the US election, the future outlook for the world economy, and the commodity pattern of gold itself.
Firstly, after the results of the US election came out, the US dollar appreciated significantly. Usually, there is a reverse relationship between the US dollar and gold, mainly due to the fact that gold is priced in US dollars. When the US dollar appreciates, other countries' currencies depreciate, increasing the cost for investors holding other currencies to purchase gold and reducing demand, which in turn suppresses the price of gold.
Secondly, the outcome of the US election also affects the world economy. The global demand for safe haven has eased, and as a safe haven asset, the price of gold has naturally fallen.
Thirdly, it is related to gold itself. As a safe haven asset, gold prices have been able to rise significantly in recent years, but commodities have their own patterns, and after a significant and long-term appreciation, the market will also have a demand for a pullback.
In addition, after the US presidential election, the decline in political uncertainty has led to a rebound in market risk appetite. Qu Rui, Deputy Director of Research and Development Department at Dongfang Jincheng, told China News Service that the continuous rise of US stocks and digital currencies has also reduced the attractiveness of gold.
Is the trend of gold monetization coming?
As the gold price falls, some investors are starting to sell gold. Will the "plunge" in gold prices trigger a wave of gold monetization?
Bian Yongzu believed that people who hold gold can be roughly divided into two types: speculative and safe haven.
Speculators will pay close attention to short-term changes in gold prices, and once they believe that there is no room for gold appreciation, they will make selling actions; And those who seek refuge tend to hold gold as a long-term asset.
Among gold investors, speculation also accounts for a relatively large proportion, so the short-term selling of this group objectively causes a decline in gold prices. However, for safe haven investors, they will still hold gold for the long term without more suitable assets to invest in, "said Bian Yongzu.
Gold prices still have support at high levels
For a long period of time in the past, geopolitical conflicts have been ongoing, and market risk aversion has been rising, driving up the continuous rise of gold prices. Recently, the continuous decline in gold prices does it mean that the gold price has entered a turning point of decline?
The interviewed experts believe that although the gold price is under some downward pressure in the short term, there is still momentum to support the high price of gold in the long run.
In the short term, international risk aversion has eased, and after a sustained decline in gold prices, it may enter a consolidation phase, "said Bian Yongzu.
In addition, the US inflation data for October will be released this Wednesday. Affected by the strengthening of second-hand car prices and seasonal support, Qu Rui predicts that the US CPI and PPI in October may still have stickiness, which may further cool down the expectation of interest rate cuts.
However, the structural contradictions in the world situation are difficult to fundamentally resolve, and risk aversion cannot be fully alleviated as a result. Qu Rui believes that considering the uncertainty of future US policies, it is expected that gold prices will fluctuate weakly in the short term, with support at around $2600 per ounce.
In the medium to long term, the US government may implement its expansionary fiscal policy in the future, which will further push up the federal government debt burden at a high level and also increase the potential risk of secondary inflation in the United States. In addition, the global geopolitical situation is still volatile, and the anti inflation and safe haven properties of gold will continue to support the price of gold.