[SMM interview] risk-based gold is sought after gold prices are still expected to rise in the medium to long term

SMM2 26: recently, the global macro risk gathered, gold was sought after by the investment market, spot gold prices continued to climb, once soared to $1680 / oz above.

Due to the impact of public health and safety problems, the international gold price has continued to rise since the beginning of February, bullish sentiment is rising, although the domestic epidemic is gradually alleviating, but the impact of the new crown epidemic abroad is becoming more and more serious, which has also made the gold price get more attention. Recently, gold has been the focus of the market, as market concerns eased on Tuesday, gold speculative long positions profit-taking, gold made a phased pullback adjustment.

Global stock market

In the U. S. stock market, the Dow has fallen sharply for several days in a row. U. S. stocks continued to tumble on Tuesday, with the Dow Jones Industrial average and the S & P 500 falling for the fourth day in a row, with both major indexes recording their biggest four-day percentage losses since December 2018. The Dow Jones industrial average closed down 3.15 per cent at 27081.36, while the S & P 500 fell 3.03 per cent to 3128.21. The Nasdaq index fell 2.77 per cent to 8965.61

In European stocks, the pan-European STOXX 600 index closed down 1.8 per cent. Germany's DAX index fell 1.9 per cent, while Italian stocks fell a further 1.4 per cent after falling on Monday. The FTSE index fell 1.94 per cent in the UK and the CAC-40 index fell 1.94 per cent in France.

The (Cboe) volatility index (VIX), a measure of investor panic, continued to soar 20 per cent on Tuesday, continuing its highest level since 2019. The index jumped 45 per cent in the last session, suggesting that concerns continued to heat up, supporting gold prices.

Although the gold stocks in the A-share market are affected by the market, they are generally positive.

Affected by the new crown epidemic, rising risk aversion demand led to a sharp rise in the international gold price, but the A-share market has been affected by the external market in the past two days, the performance is not good, but the A-share market gold stocks have been positive recently, and recently become an important safe haven position in the A-share market.

Jiang Xingchun, director of Soochow Futures Research Institute, told SMM:

We have been bullish on the performance of gold prices since the second half of last year, mainly in two aspects: on the one hand, the global monetary policy is loose, and the Federal Reserve has cut interest rates and repurchased bonds three times in the past year; on the other hand, the new crown virus epidemic has had a negative impact on the global economy so far this year, superimposed on geographical conflicts in the Middle East, and the nature of gold risk aversion is fully evident. As a result, the price of gold is still on an upward trend, which does not rule out hitting a new high since 2011. Accordingly, gold mining, smelting enterprise profits will have a better release and embodiment, gold stocks still have room to rise.

Han Jun, a senior industry analyst, said in an interview with SMM:

Gold continues to be in a slow bull market for a long time, mainly because the Fed's monetary policy is still in the cycle of interest rate cuts. Gold has the strongest financial attribute compared with other commodities, so it is also the most affected by the global economic environment, and the United States still leads the global economic trend as the only economic superpower in the world (economic data level). It is expected that the Fed's monetary policy will remain loose in the next year or two, and the market's expectation that the Fed's monetary policy will remain loose will cause gold to continue to be in a slow bull market in the medium to long term.

Recently, there have been a large number of global risk events, led by the gradual spread of the global epidemic, which has triggered the risk aversion of gold. Countries where safe haven varieties such as the dollar and yen, which were supposed to be strong, have also been affected by the epidemic, resulting in fewer varieties that can be invested in global financial markets and less affected by the epidemic. As a result, the inflow of large amounts of safe haven and investment funds into the gold market has pushed up the price of gold in the near future, and has also led to the rise of gold stocks. However, what is on the alert is that every time in the history of gold investment, which has been pushed up by geopolitical and risk events, the market will quickly fall back as the risk recedes, and it is believed that the epidemic will soon dissipate under the common battle of people all over the world. at that time, the price of gold will fall back with it.

To sum up, the gold price is still in the slow bull market in the medium to long term, the short-term gold price rise caused by risk events is difficult to stabilize, we need to beware of falling prices, waiting for the fall can be considered to build a position in the long-term precious metals investment.

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