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2024-06-01

Gold Soars Past 800 Yuan/Gram: Is It Time to Buy?

Recently, the price of gold has continued to rise, repeatedly setting new highs, and once again attracting everyone's attention to gold. Every time the price of gold rises, everyone has only one question: Can we still get on the train now?

Gold Price Rises, Gold Jewelry Prices Soar

The price of gold has recently experienced another round of increases, setting new record highs on multiple occasions.

On October 22, spot gold in London once rose to $2,748 per ounce, setting a new historical high, with a year-to-date increase of more than 33%.

On October 23, the price of gold in London once again broke through the high of $2,748 per ounce, standing at $2,758.2, and once again set a new historical high.

However, on the night of the 23rd, the gold price suddenly plummeted. Spot gold fell below $2,710 per ounce during the trading day, a drop of nearly $50 from the daily high, with a daily decline of 1.4%.

Along with the rise in gold prices, there are also major brands that mainly sell gold.

As early as October 19, the quotes for gold jewelry from several brands had already broken through the 800 yuan/gram threshold. As of October 24, Chow Tai Fook, Chow Sang Sang, and Luk Fook Jewelry all quoted 806 yuan/gram, while Lao Feng Xiang quoted 813 yuan/gram.

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Taking the big brother in the brand gold shops - Chow Tai Fook as an example. Its retail gold price has risen from 767 yuan/gram on September 23 to 806 yuan/gram on October 19, a 5.08% increase in just 25 days.

Even the "wholesale market for gold" in Shuibei has seen gold prices soar. Recently, it has risen from 595 yuan/gram on September 23 to 633 yuan/gram on October 24.Gold prices are unstoppable on the rise!

Global stability is in urgent danger, and there are four reasons for the rise

Under the situation of global stability in urgent danger, it has stimulated people's awareness of risk avoidance, promoting the continuous rise of gold prices.

The main factors affecting global stability are as follows:

1. Geopolitical conflicts

Gold is a natural risk-avoiding asset, and there has been a saying since ancient times that "antiques in prosperous times, gold in troubled times". It is enough to reflect the value of gold in times of war or turmoil.

Recently, the situation in the Middle East has continued to deteriorate, the Russia-Ukraine war has escalated again, and the "border behavior art" between North and South Korea has increased the market's demand for the risk-avoiding attributes of gold.

Under the current situation where the war is intensifying, it is very likely to continue to promote the rise of gold prices.

2. Federal Reserve's monetary policy

The Federal Reserve's interest rate reduction policy is also directly affecting the price trend of gold.The Federal Reserve has currently confirmed that it has entered a rate-cutting cycle. Although supported by strong U.S. labor data, market expectations for Fed rate cuts are not as strong as before, and the magnitude of rate cuts in November and December should not be significant.

However, as long as the Fed maintains rate cuts, funds will shift from banks to the gold market, which is a significant positive for gold.

In addition, the impact of the U.S. elections and the weakening of the dollar is also driving gold prices to continue to rise.

The market is generally optimistic about the future, but investment should be more cautious.

It is worth noting that even though gold prices continue to rise, institutions still have a positive outlook for gold's future performance.

At the annual London Bullion Market Association conference held in Miami, market participants predicted that gold prices could rise to $2,941 per ounce within the next year.

On the one hand, under the current international environment, the demand for safe-haven assets will continue to drive up gold prices; on the other hand, there is still uncertainty regarding the safe-haven sentiment, global central bank gold demand, and the trend of the dollar that affect gold prices.

In the face of such a market environment, investors should be more cautious. In the short term, the continuous rise in gold prices does provide a good arbitrage opportunity, but in the long term, the stability of gold prices cannot be guaranteed and is easily affected by the environment and policies.

Market professionals suggest that due to the uncertainty of gold price fluctuations, investors can reduce risks by diversifying investments, such as combining gold investments with other asset classes.

In summary, when facing such opportunities in the gold market, investors should make rational decisions based on their own risk preferences and long-term investment strategies.

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