At 2: 00 a.m. Beijing time on Thursday, the Federal Reserve announced interest rate decisions, leaving interest rates unchanged at 0%, and launched a debt reduction program in November, reducing the size of monthly asset purchases by $15 billion, basically in line with market expectations. After the announcement of the interest rate statement, interest rates on 10-year US Treasuries and the dollar index rose, while US stocks and gold fluctuated.
Taper has landed, but its impact on various asset prices will gradually become apparent. Cai Yili, a futures researcher at Huatai, said that in the historical Taper stage, US bond interest rates first rose and then fell. After the Federal Reserve announced Taper, there will be opportunities for US bond interest rates to peak and fall, emerging market stock indexes to stabilize and rebound, and gold to rebound.
It is worth mentioning that, on the one hand, gold prices have generally risen since the second half of 2018, but have adjusted since 2021. As a result, some investors choose to buy on bargains in order to get long-term gains from rising gold prices. On the other hand, the data show that by the end of the third quarter of 2021, the overall position of domestic gold ETF was 72 tons (about $4.1 billion, 26.7 billion yuan), and the inflow in that quarter was 3.2 tons (about $100 million, 730 million yuan).
For a long time, the market "turns fengshui, turn bulk to gold", some institutional analysts said that gold will deduce a period of logic of inflation expectations after a large amount of money. Since September this year, commodity prices have risen, but gold has not had a chance to perform. It may be that the Fed has released pressure that is obviously not good for gold. Then if the Taper lands as scheduled, the gold will have a rebound.
Taper disturbs international gold price
At 2: 00 a.m. Beijing time on Thursday, the Federal Reserve announced a decision of the Monetary Policy Committee in November to formally launch the Taper process as expected, while keeping the target range of the federal funds rate between zero and 0.25%. It will reduce the size of asset purchases by $15 billion a month and adjust the pace of bond purchases as appropriate.
After the announcement of the interest rate statement, interest rates on 10-year US Treasuries and the dollar index rose, while US stocks and gold fluctuated. Since then, US stocks and gold have both risen, while interest rates on 10-year Treasuries and the dollar index have fallen.
Guotai Junan Futures said that as expected by the market, the formal Taper, contraction will begin this month and start at a rate of 15 billion US dollars per month as previously expected, but the pace may accelerate or slow down in the future depending on economic conditions. With regard to inflation and employment, which are of great concern to the market, Powell admitted that he underestimated the impact of supply bottlenecks and acknowledged that structural problems in employment could persist into the second half of next year, which also means that interest rate increases conditional on full employment will not begin until at least the second half of next year. In fact, the market expectations of interest rate hikes have been advanced to July next year, there are suspicions of excessive expectations, but this meeting Powell has been playing down the expectations of interest rate increases, making the focus back to the rhythm of Taper.
As far as market reaction is concerned, gold and silver have begun to react slightly before the meeting, and 10-year Treasury yields have risen in a straight line after the meeting was announced, but as prices have largely digested Taper expectations, gold and silver have rebounded after Taper landing, and silver has basically recovered its previous decline and stepped out of the "V" shape.
For a long time, "since the beginning of the year, international gold prices have fallen more than 7 per cent after repeatedly selling at the level of $1800 per ounce." The main obstacle to gold is the strength of global stock markets, "said some industry analysts. In fact, just after the announcement of the Fed's decision, the S & P and the Dow among the three major indexes of US stocks rose one after another. finally, the three major indexes rose for the fifth day in a row and closed at a new high, while the Russell 2000 index, which represents small-cap stocks, closed up 1.8%. It also hit an all-time high.
Against the above background, the international gold price as a whole is still hovering in the range of 1750-1800 US dollars per ounce recently. Since the beginning of this week, the price of gold denominated in RMB in the domestic market has also shown a volatile pattern, with the Shanghai Gold Exchange (AU) maintaining around RMB365 per gram.
There is still a chance for gold to be laid out.
Earlier, Cathay Pacific Gold ETF said in its third quarterly report that in the medium to long term, the prospects of the global epidemic and economic recovery are still uncertain, and gold may continue to play a risk aversion role in the asset portfolio; while the results of the Fed's September interest rate meeting show that the probability of raising interest rates in 2022 is expected to increase, and gold still faces the swings of Taper and Fed policies in the short and medium term. Standing at the moment, gold still has a strong allocation value, in the frequent global risk events, and the risk of recession is still there, central banks, including the Federal Reserve, are still releasing liquidity to maintain the economy. The safe-haven value of gold may be highlighted. Adding gold to the portfolio can effectively reduce portfolio volatility.
However, according to the latest Global Gold demand Trends report released by the World Gold Council, total global gold demand reached 831 tons in the third quarter of 2021, down 7% from the same period last year and 13% from the previous month, mainly due to a small outflow of gold ETF positions.
Some analysts said, "this quarter gold ETF positions a small outflow of this situation needs to be combined with a larger background." A year ago, investors flocked to gold, hoping it could hedge against the novel coronavirus epidemic. Gold ETF particularly benefited from such investments, with purchases increasing by more than 1000 tons in the first three quarters of 2020. Although some gold ETF investors are selling this year, by contrast, the outflow is actually not large. "
By contrast, at the end of the third quarter of 2021, the overall position of domestic gold ETF was 72 tons (about $4.1 billion, 26.7 billion yuan), with inflows of 3.2 tons (about $100 million, 730 million yuan) in that quarter.
According to the World Gold Council, investors' interest in gold ETF mainly comes from two aspects:
First of all, the overall market showed two-way fluctuations in the third quarter, leading to an increase in investor demand for risk aversion. The CSI 300 stock index fluctuated widely in the third quarter, falling 7%, the biggest quarterly decline since the first quarter of 2020.
Second, the gold price adjustment in the third quarter prompted some investors to increase the allocation of gold ETF. The entry of investors looking for bargains may be another factor in the increase in China's gold ETF inflows this quarter.
With regard to the future, Societe Generale Securities pointed out in its research report that since May this year, on the one hand, inflation expectations brought about by instability in the global supply chain have remained high, on the other hand, the Federal Reserve is accelerating expectation management, and nominal interest rates on US bonds are also rising, real interest rates are sandwiched in the middle, gold prices also fluctuate in a relatively narrow range, and there is no definite direction. But it's almost time for gold to choose the direction. For a long time, the market has been "turning fengshui, turning bulk to gold", gold will deduce a period of logic of inflation expectations after the bulk. Since September this year, commodity prices have risen, but gold has not had a chance to perform. It may be that the Fed has released pressure that is obviously not good for gold. If Taper lands as scheduled, there will be a rebound in gold.
However, before that, Xu Zhiyan, assistant general manager of Huaan Fund and senior director of the Index and Quantification Investment Department, suggested that from the current situation, investors should not hear that gold had an opportunity, so they bought the whole warehouse one by one. It is suggested that you can use 3-6 months or 1-3 months to gradually lay out at the bottom by means of fixed investment or bargain-hunting intervention. The year-end time window is critical, when you can see the Fed's expected timetable for withdrawing quantitative easing and raising interest rates, as well as a clearer picture of the macroeconomic situation next year. In short, it is a time for gold investment, and investors are not advised to wait until it has begun to rise before chasing after it has begun to rise.
