Last week, the gold market warmed up, and the main contract of COMEX gold futures broke through the $1900 / oz mark, rising as high as $1905 / oz, an eight-month high.
The latest report from the World Gold Council shows that gold prices remained stable amid market volatility and rising yields in January. Gold ETF inflows in January were 46 tonnes ($2.7 billion), the highest monthly increase in holdings since May 2021. The average daily trading volume of gold rebounded significantly. The report argues that the ability of gold to fluctuate meaningfully in either direction in the short term will depend on whether investors are more worried about inflation not cooling or whether interest rates are rising faster than expected.
Management funds increased their net long positions in COMEX gold futures and options by 40758 positions to 125646 positions in the week ended February 15, according to a report released by the Commodity Futures Trading Commission ((CFTC)) on Friday.
Guoxin Futures believes that risk aversion in the tense situation between Russia and Ukraine is still high. The Fed's tightening expectations came to an end after the minutes of the meeting with limited incremental information were released, and the market's aggressive interest rate hike expectations faced adjustment. Gold gained strong support near US $1840 / oz in the early oscillation range, while silver rose. In addition, inflation has not yet come down, with US CPI rising further and higher than market expectations in January, inflation has become more widespread. In the United States, the average non-farm hourly wage rose 5.7% in January from a year earlier, the job vacancy rate is high, and inflation will remain high under the wage inflation spiral, providing support for precious metals. The market expects the probability of the Fed to raise interest rates twice (50 basis points) in March to remain above 50%, and the probability of raising interest rates seven times by the end of the year to 50%, which is already more aggressive. Historical trends show that the presence of gold is driven upward after the Fed raised interest rates. It is recommended that the layout of bargain hunting should be more simple.
