The overall US economic data released on December 22nd exceeded expectations, with GDP growing at an annualised rate of 2.3 per cent in the third quarter, higher than expected of 2.1 per cent, and consumer confidence index rebounded to 115.8 in December, higher than expected by 110.5. After the release of the data, the three major indexes of US stocks continued to recover, the volatility of the US dollar index weakened, and spot gold returned to $1800 / oz after a month.
Overall, spot gold gradually rebounded from a low of $1676.50 / oz to a high of $1909.60 / oz in the first half of this year, but plunged sharply in June, starting a volatile market in the second half of the year. In view of the continued volatility of gold prices, a number of banks took measures to tighten their precious metals business during the year, and some banks have "tried first and foremost" to consolidate the business foundation by setting up independent and market-oriented precious metals business departments to better resist the risk of price fluctuations.
Looking forward to next year, industry insiders expect that while the uncertainty of the global epidemic and inflation still supports the gold price to some extent, the rise in US real interest rates will still have a restrictive effect on the gold price in the context of the Fed raising interest rates ahead of schedule.
Gold prices fluctuate and many banks tighten precious metals business
When the Federal Reserve interest rate meeting landed in mid-December, Taper officials announced that the rate increase was accelerated, and the number of rate increases on the dot map became clearer. Spot gold opened a low shock and fell back to 1753.77 US dollars / ounce at one time. The opening of the week continued the decline on Friday, but stabilized and rebounded to the 1800 mark yesterday. At the same time, the dollar index has also recently entered a consolidation pattern, but after the release of relevant US economic data on Wednesday, the dollar index weakened further, falling 0.37% on the day, showing a "seesaw" effect with gold prices.
"the current fluctuations in the dollar index and gold prices are small short-term fluctuations. The volatile decline in the dollar index yesterday was mainly related to optimistic expectations of a new variant of the virus and hawkish comments from ECB officials. " Shen Xinfeng, assistant general manager of the Northeast Securities Research Institute, told the Financial Associated Press that specifically, CDC officials showed confidence in the relief of the epidemic, while the United States urgently approved Pfizer's oral new crown medicine on Wednesday. The optimistic prediction of the trend of the epidemic boosted market risk sentiment and depressed the safe-haven demand of the dollar. In addition, the ECB said yesterday that it might gradually reduce asset purchases next year and propose to raise interest rates before the end of asset purchases, which is not quite in line with the ECB's recent dovish stance, so hit the dollar index again.
Zhou Maohua, a macro researcher in the Financial Markets Department of Everbright Bank, believes that the gold price has rebounded slightly recently, mainly due to the weakening of risk aversion in the market and the decline in the dollar index, which is specifically reflected in the recent strength of US stocks and a decline in the market panic index, which indicates that the risk aversion mood in the short-term market has obviously eased.
Since the beginning of this year, with the continued volatility of international gold prices, as the main force in China's precious metal financial market, most state-owned banks and stock banks have successively announced the adjustment or even closure of precious metal business. The announcement generally said that the precious metal market price continues to fluctuate, and the trading risk of acting precious metal business continues to maintain a high level. Therefore, in order to further protect the rights and interests of investors and ensure the safety of investors' funds, Make adjustment measures to the relevant precious metals business.
While standardizing the precious metal business, there are also banks divesting this kind of business from the financial management department of the parent bank and setting up a separate precious metal business department. In August this year, the CBIC approved China Construction Bank to set up a precious metals and commodities business department as a branch-level franchise, including agency and proprietary precious metals business, precious metals and commodity derivatives business. According to the school recruitment announcement issued by the business department in September, the jobs to be recruited include marketing, research and development, trading, internal control compliance and comprehensive management in the precious metals and commodities business.
An insider in the banking industry told the Financial Associated Press that banks with larger precious metals business were likely to follow the example of China Construction Bank in setting up similar independent business departments in the future, and further improve such business mechanisms in terms of marketing, trading, research, and so on. In contrast, banks with smaller business volumes may choose to suspend temporarily for the sake of risk prevention.
The Federal Reserve raises interest rates ahead of schedule. Gold prices still have downward pressure next year.
Looking forward to 2022, under the interweaving of many factors, such as the uncertain trend of overseas high inflation, the Fed's expectation of raising interest rates in advance, and the uncertainty of novel coronavirus's epidemic situation, as an important safe haven asset, whether the gold price can get out of the volatile market has attracted market attention.
Zhou Maohua believes that from the perspective of the trend, there is still uncertainty about the prospects for global epidemic prevention and economic recovery, and negative real interest rates still support gold to a certain extent, but the direction of the normalization of Fed policy is basically determined, and the global interest rate center is gradually rising. Gold holding costs will gradually weaken its attractiveness. Therefore, in the short term, the gold price lacks direction and is expected to maintain a narrow range of fluctuations.
"from a global perspective, inflation will be the main thread for a long time, and it is still a high probability that high inflation data will be on the table of policy makers until the end of the first quarter of next year, which will be good for gold." BoCom Financial's "2022 Asset allocation Outlook report" pointed out that, however, there are many potential disadvantages to gold. First of all, the low tide of global liquidity will affect the price of gold, and the US dollar may strengthen during the Fed's interest rate hike cycle. To some extent, it will also be negative for gold.
Judging from the epidemic situation, the above BoCom financial report shows that the introduction of oral medicine by novel coronavirus and the increase in vaccine supply will promote a rise in risk appetite. Therefore, on the whole, BoCom Finance believes that with the passage of time, multiple unfavorable factors may show a strengthening trend, and gold is expected to be dragged down.
"the dollar index may remain strong for a certain period of time next year, with a high probability before and after a low. Superimposed by the rise in real interest rates in the United States, gold prices are expected to have downward pressure next year. " Shen Xinfeng said that from the historical cycle of raising interest rates, the dollar index will continue to strengthen with the expectation of raising interest rates, and the dollar index is usually at a relatively high level before the start of the rate hike. The United States is expected to raise interest rates at least twice next year, the first around the middle of the year. Therefore, from the perspective of the dollar exchange rate, gold can not be strongly supported.
In Shen Xinfeng's view, the more important factor is that real interest rates in the United States will rise next year, putting pressure on the trend of gold prices. On the one hand, as the US interest rate hike approaches next year, the nominal interest rate hub will continue to rise; on the other hand, with the gradual repair of supply next year, the problem of high commodity inflation may slowly decline, and inflation expectations will also be lower than in 2021. Overall, real interest rates will not remain as low as they are this year, suppressing gold prices.
Cixin Investment Research Institute believes that Bubble, the assets accumulated by the US stock market and real estate in the course of continuous quantitative easing, may face the threat of rupture as the Fed raises interest rates. Therefore, in the face of this threat, investors can balance by allocating safe-haven assets such as gold.
