SMM News: recently, the gold market has been hit continuously by vaccine news, and the downward trend has fallen to around 1870 US dollars / oz, making it difficult for the upstream to break through.
Gold prices rose sharply this year, breaking through the $2000 / oz mark to set a new all-time high, and gold ETF also showed a strong inflow.
Recently, however, with the emergence of vaccine news, risk aversion in the market has declined, gold prices have fallen, and gold ETF has continued to flow out. According to Comex futures position data, long positions held by hedge funds fell to their lowest level in 17 months.
Tai Wong, head of precious metal derivatives trading at Bank of Montreal Capital Markets (BMO Capital Markets), said the good news about the vaccine raised expectations for a return to normal.
"while low interest rates and more stimulus programs will boost gold prices, the short-term upside has been weighed down."
With more liquidity likely to be injected into the market, inflation will be a key factor affecting the gold market.
In the wake of the 2008 financial crisis, the Fed loosened aggressively among central banks, and concerns about inflation pushed gold prices to a peak in 2011, but inflation has largely held up since then and gold prices have fallen back. Oliver Harvey, macro strategist at Deutsche Bank (Deutsche Bank), points out that this time it will be different from 2011.
"when the epidemic is over, there will be a lot of liquidity in the market, people will choose to save because they are trapped at home, and the savings rate will soar. If inflation rises to 3% or 3.5%, then a lot of people will notice. "
For gold bulls, a weaker dollar and various stimulus programs will boost gold prices.
Standard Chartered Bank (Standard Chartered) precious metals analyst Suki Cooper said that under loose monetary policy, interest rates will remain low, so gold prices are more upward.
However, due to the uncertainty of this US election and the division of the US Congress, the next wave of stimulus may be very difficult.
Darius Tabatabai, head of trading at Arion Investment Management, points out that gold will come under pressure if investors transfer money to other assets as the economy recovers.
Rhona O'Connell, head of market analysis at StoneX Group, pointed out that in the case of a rebound in risk sentiment, investors will turn to risk assets, gold bulls may have reached their peak, gold prices may usher in a turning point.
"but the vaccine is not a panacea, and it is still a long way from fully returning to normal."
