Gold Feast under the background of Trade friction + easing of Shanghai Gold Futures

SMM, Aug. 5, due to trade frictions between China and the United States and the RMB exchange rate breaking through the key price of "7", the Shanghai gold futures contract rose by the limit, and as of press release, more than a thousand hands were still hanging on the trading board waiting to be traded. Overall, the rise in gold, coupled with global loose monetary conditions and poor economic prospects in the future, have led to a particular preference for gold assets.

(Shanghai gold trading limit)

The Yangtze River macroscopically adheres to Zhao Wei's team said that in an environment of accelerated global economic decline and easy liquidity, gold tends to rise. Looking back on history, whether in 1984, 1989, or 2001, 2007, as the global economic locomotive, the United States economy fell sharply, into recession, the price of gold has risen. The rise in gold prices at the end of the economic cycle was mainly due to a decline in real interest rates in an environment of loose global liquidity. Specifically, as the US economy accelerates its decline, the Fed tends to enter a rate-cutting cycle; the US real interest rate hub generally falls back, driving up the price of gold.

Zhao Wei's team pointed out that the Fed may return to the interest rate cut channel, open the prelude to global liquidity easing, the value of gold allocation is prominent. The Fed's monetary policy is a bellwether of changes in the global liquidity environment. The Fed signaled a rate cut in June as the economy slumped and pressure intensified to worsen jobs. For some time to come, the Fed may return to cutting interest rates as a prelude to global liquidity easing. Against this backdrop, gold will continue to benefit from a fall in the real interest rate hub.

Founder Nonferrous Research team also said that it attaches great importance to the phased opportunities of precious metals. Shanghai gold is up 16.93% and Shanghai silver is up 11.90% since the beginning of the year. History shows that gold has established a rally, silver will start to make up for the rise, and the increase will exceed that of gold, and the ratio of gold to silver is expected to return to a high level.

(gold and silver, weekly chart) the team believes that the decline in the RMB exchange rate reflects the pressure on the domestic economy during the trade war, and later on, the trade war is likely to be transmitted to the exchange rate war. In the international environment of insufficient aggregate demand and rampant trade wars, beggar-thy-neighbour monetary policy has gradually entered the reality, and the environment of competition for easing and devaluation will add fuel to the gold rally.

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