At the end of the year and the beginning of the year, precious metals will show a certain seasonal rise. On the whole, based on the judgment that US real interest rates are below the zero axis, the gold bull market still exists in the medium to long term, and unless policy is loosened again in the short term, the lateral adjustment of gold is not over.
The allocation rate of precious metals has declined.
As one of the major asset allocation assets, gold showed an upward trend in the first and second quarters of last year and began a pullback in the third and fourth quarters. In the first half of last year, the Federal Reserve led the world's central banks to cut interest rates again, and the world's central banks played a role of counter-cyclical adjustment, which provided important support for precious metal prices in the second half of the year and this year. Since August last year, the core of the crackdown on precious metals prices lies in the postponement of the new US fiscal stimulus package, coupled with the landing of US presidential election boots and the good news of novel coronavirus vaccine research and development, the market is sceptical about the prospect of continued substantial liquidity easing, causing gold to break and fall in September and November last year.
Since mid-September last year, precious metals at home and abroad have begun a unilateral downward trend. After the international gold price fell below the $1900 / oz mark and the international silver price fell below the important round mark of $26 / oz, the volume decline for three consecutive days began. Silver fell even more in the inner and outer markets. This was accompanied by a rebound in the dollar index, which peaked around 94.5. This round of decline in gold and silver is second only to the trend after the outbreak of the epidemic in March. The new fiscal stimulus plan in the United States has been delayed, and the Federal Reserve is unable to spend on its own, disappointing gold and silver investors. At present, market concerns about the post-epidemic recovery and fiscal stimulus in the United States are rising.
The seasonal rise is predictable.
The COVID-19 epidemic continues to suppress consumer demand in kind, but it has pushed up people's demand for safe-haven investment for gold. More importantly, driven by the flooding of global central banks and fiscal stimulus, it has stimulated the demand for ETF allocation of a wide range of assets by investment institutions in Europe and the United States, offsetting the weak demand for gold in other parts of the world. Driven by investment demand, gold ETF inflows reached a record 1003 metric tons in the first three quarters of last year, accounting for more than 33 per cent of total demand, up from less than 10 per cent the year before. This was followed by a rise in the share of gold coins and bars from less than 20 per cent the year before last to nearly 21 per cent last year.
Since the third quarter of last year, institutional ETF positions have risen and declined, configuration demand has begun to pullback, and funds have shifted to equity and other bond markets. SPDR gold ETF's position has fallen below 1200 tonnes, but remains at a relatively high level in history. However, from the correlation between gold ETF cumulative positions and international gold prices, it is found that in the third quarter of last year, the net inflow of gold ETF positions was 272.5 tons, a slowdown compared with the second quarter.
According to the quarterly historical performance of precious metals, gold and silver in January and February is a relatively bright month for the whole year, on the one hand, it comes from the seasonal factors of consumption during the Lunar New year in China; on the other hand, the investment in the equity market enters the closing battle at the end of the year, and some of the profit funds need to find a safe pool, while precious metals or other safe-haven currencies become the defensive allocation needs of large hedge institutions.
From the perspective of real interest rates in 2021, the main factor affecting the price of gold is inflation, and whether inflation can rise mainly depends on the fiscal policy of the United States. At present, the monetary policy of the Federal Reserve has come to an end, and the market expects that the Fed will eventually implement the yield curve to control (YCC) to boost the economy and inflation expectations. Focus on the landing of US fiscal policy, and according to the current bipartisan distribution of power in the United States, it is also very difficult to quickly push forward an effective fiscal stimulus package. On the whole, after gold broke through the all-time high this year, there is a demand for pullback and consolidation in the short and medium term, but the price center of gravity has a long-term trend upward, and long holders still need to suffer from short-term fluctuations.
