MT4.MT5 trend analysis: the international gold price fluctuates greatly

Since the beginning of this year, due to the overlapping effects of multiple factors such as the ups and downs of the epidemic, international geopolitical conflicts and the adjustment of the Federal Reserve's monetary policy, the price of gold has fluctuated significantly. 

 

Since hitting a high of $2,070 an ounce in March, the international gold price has fluctuated all the way down. As of July 20, the price of gold futures on the New York Mercantile Exchange closed at $1,694.3 an ounce, hitting a new low in nearly 10 months. However, it has picked up slightly in recent days.

 

 

Gold is a traditional safe-haven asset. After the outbreak of the Russian-Ukrainian conflict, the market has higher expectations for gold prices to rise. The reality is that after the international gold price soared above $2,000 an ounce, it began to fall all the way. 

 

Industry insiders generally believe that there are many factors that affect the rise and fall of gold prices. After the second quarter, the focus of the market turned to the Fed raising interest rates. With the rising inflation in the United States, the expectation and intensity of interest rate hikes were gradually strengthened, and the dollar index rose strongly, to a large extent. caused the price of gold to fall.

 

Zhou Maohua, a macro researcher at the Financial Market Department of China Everbright Bank, said that at the end of February this year, geopolitical tensions and expectations of high U.S. inflation boosted investment demand for gold. Appeal. 

 

At the same time, under the expectation of the Fed raising interest rates, the liquidity of the US dollar has tightened, resulting in a strong appreciation of the US dollar, which also has a negative effect on the price of gold.

 

Generally speaking, the price of gold has an inverse relationship with the movement of the US dollar. The U.S. dollar strengthened after the Federal Reserve raised interest rates, while the dollar-denominated gold price fell. Since the Federal Reserve announced in March this year that it would raise the benchmark interest rate by 25 basis points, gold has weakened against the backdrop of the increasing expectations of a US dollar interest rate hike.

 

"This year's continued decline in the price of gold is caused by the superposition of multiple factors." Xia Yingying, a precious metals analyst at Nanhua Futures, believes that first, the situation in Russia and Ukraine has turned to "tug-of-war", and the risk aversion has gradually subsided, leading to a correction in the price of gold; secondly, the strong dollar has dragged down the valuation of gold. 

 

The value fell, and the US dollar index rose from less than 100 in March to a recent high of 109. The market's expectations for the Fed to raise interest rates continued to increase, and the global economic recession fears triggered an increase in the safe-haven demand for the US dollar. 

 

In addition, the 10-year U.S. inflation expectation has dropped to 2.3% to 2.4%, compared with the current actual inflation pressure of more than 9%, reflecting that the Fed’s management of inflation expectations has achieved remarkable results, which has also curbed the purchase demand for gold.

 

A recent report by the World Gold Council also pointed out that a stronger dollar, weaker commodity markets and declining investor positions may be the three main reasons for the recent decline in gold prices.

 

Data show that as of July 18, the world's largest gold ETF total holdings has dropped to 1,009 tons, down nearly 100 tons from the April holdings high.

 

In this regard, the World Gold Council believes that the focus of investors' concerns about the US economy has shifted from "high inflation" to "recession", which has also led to the adjustment of its investment portfolio, which has affected gold accordingly. 

 

At the same time, many traders regard $1,800 an ounce as an important support level. After the price of gold falls below this level, it may trigger a chain of closing long positions and adding short positions. Summer is usually a weaker season for gold, and India's sudden increase in import duties on gold has added to the level of pessimism among traders.

 

Experts have different views on the gold price trend in the next stage, but they all believe that it will depend on the balance between multiple factors in the future. 

 

"In the short term, gold will still be under pressure in the third quarter, because it is still difficult to determine whether U.S. inflation has peaked. Although the prices of commodities represented by crude oil have fallen to a certain extent recently, the low base effect of CPI in the third quarter has It will still increase the risk of higher inflation." Xia Yingying said.

 

Zhou Maohua also believes that from the trend, the trend of gold is still under pressure. At present, the Federal Reserve is in the middle of raising interest rates, the European Central Bank's interest rate hike cycle is expected to start, the global interest rate center will rise, and high inflation and high interest rates will gradually suppress demand in Europe and the United States. 

 

Tightening financial conditions and high interest rates will weaken the attractiveness of gold investment.

 

A senior gold investment analyst of Caibai shares told reporters that he predicted that the gold price is expected to be between US$1,680 and US$1,700 in the short term, and there is a recovery trend. Drive is expected to achieve an increase.

 

For investors, investing in gold at this stage should be more cautious and rational. “Due to the more complex global geopolitical situation in the near future, the uncertainty of global inflation, economic and policy outlook is still high, market expectations are divergent, market volatility is fierce, and the predictability of gold price movements has further declined. Investors should strengthen their prevention of potential risks and moderate Reduce the leverage of related varieties and optimize your own asset investment portfolio." Zhou Maohua suggested.