SMM News: HSBC (HSBC) said that global trade issues will become an important factor in the long-term trend of gold.
James Steel, the bank's chief precious metals analyst, said the recovery in global trade had put pressure on the gold market because it was a sign of global economic growth, geopolitical stability and positive consumer sentiment.
This environment is good for both the dollar and U. S. stocks, reducing the demand for risk aversion in the market.
"in this case, no one would want to hold gold, at least not too much."
Steel also pointed out that gold prices could rise sharply if international trade weakens.
"the trade outlook looks better than before, but it is still weaker, so there is support for gold."
International trade is an important aspect from a global economic perspective, but Steel points out that the real factor driving the long-term trend in gold prices is real interest rates.
The bank pointed out that in terms of nominal interest rates, the yield on the 10-year Treasury note will remain around 50 basis points this year and next. In the current environment of low interest rates, a slightly higher inflation means that real interest rates are negative.
"if you look at real interest rates, it will remain negative, so holding gold in this environment becomes more attractive."
Recently, the gold market has been in a state of consolidation, although maintained the support of $1900 / oz, but failed to return to above the resistance of $2000 / oz.
Steel said the gold market's downward support was solid, although some upward momentum weakened. In fact, the correction in gold prices has been quite small since hitting record highs in August, and although further corrections in the short term are still possible, gold prices are expected to rise above $2000 an ounce by the end of the year.
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