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Cailianshe News, August 7 (Reporter Peng Kefeng)Since entering August, there has been a continuous stream of negative news regarding gold.

This afternoon, the central bank data showed that it has stopped increasing its gold holdings for three consecutive months. On August 5 and 6, both spot gold and gold futures fell, and some key thresholds were broken. What are the considerations for the central bank to stop buying gold? How will the international gold price go in the future?

Gold investment continues to be unfavorable. The central bank stops buying gold and spot gold also falls.

This afternoon, the latest data from the People's Bank of China showed that the gold reserves at the end of July were 72.8 million ounces, the same as the data from the previous month and the month before that. This means that the central bank has stopped increasing its gold holdings for three consecutive months.

In this regard, a macro analyst of a securities firm told Cailianshe reporters that the central bank stopped buying gold for three consecutive months. There are two main reasons. First, the central bank may feel that the recent international gold price is still high and it is "not worth it" to buy at high prices. Second, it is a signal to "cool down" the domestic gold investment market, and this factor may be more important - because from the perspective of the central bank, it does not actually want domestic investors to invest too much money in gold trading venues.

The reporter also noticed that after a continuous rise in July, the international gold price "dives" in the first week of August. On the evening of August 6, spot gold fell 1% to $2,384.9 per ounce; in the early morning of August 6, COMEX gold futures closed down 0.72% at $2,452 per ounce. Overall, in August, spot gold has fallen below the key mark of $2,400 per ounce, and COMEX gold futures have been falling for several days after briefly reaching $2,500 per ounce.

In this regard, the above-mentioned analyst told reporters that the short-term fluctuation of international gold prices is related to the recent fluctuations in the international stock market. In particular, the previous plunge in the Japanese stock market has caused some investors to take profits in the gold market to repay the borrowed yen.

Institutions are still optimistic that the Fed's rate hike will be good for gold, and geopolitics is also good.

However, the reporter noticed that, on the whole, many institutions still remain optimistic about the future trend of gold.

On August 6, Chen Zhuifeng and others from Qianhai Gold Research Institute released a report saying that the Fed's current inaction is in line with market expectations, and the subsequent trend of gold will still be based on the expected pricing model. Looking at the future market, they believe that the Fed will be forced to open the door to interest rate cuts in September due to major risks such as economic recession and huge hidden dangers in the Treasury market, and may even take unexpected temporary easing measures. The unexpected interest rate cut will directly push gold higher again.

Today, Tian Yuan and others from Huayuan Securities released a research report saying that the new and old paradigms resonate, and they continue to be optimistic about the allocation opportunities in the gold sector under the expectation of interest rate cuts. Huayuan Securities believes that gold has four attributes of finance, currency, safe-haven, and commodity, and the real interest rate of the US dollar is the preferred indicator in the long-term dimension. Its safe-haven attribute corresponds to the fact that when there is a risk event, investors tend to choose safe-haven assets to achieve the purpose of value preservation and appreciation. Its commodity attribute corresponds to the global supply and demand of gold, and in recent years, the purchase of gold by global central banks has become an important marginal increase, which has increased from 254.9 tons in 2020 to 1037.4 tons in 2023.

"From 2018 to 2022, gold went through a complete cycle of interest rate cuts and hikes. As the epidemic continued to ferment, gold went out of a special bull-bear cycle, and the real interest rate framework had a good explanatory effect throughout the period. From 2022 to 2024, gold rose and fell amid repeated inflation and the swing back of recession/interest rate cut expectations, and ushered in a historical high under the resonance of the old framework and the new paradigm. The real interest rate framework had a good explanatory effect most of the time, and the weight of the new paradigm continued to emerge for a period of time." Huayuan Securities believes that under the resonance of the old and new paradigms, the long-term price center of gold is expected to continue to rise.

The above-mentioned analyst also said that, based on the comprehensive international market information, although the Central Bank of China has recently stopped buying gold, countries such as India are increasing their gold holdings, which is also good for the gold market. At the same time, considering the continuous conflicts in the Middle East, geopolitics will become a long-term unstable factor, and the risk aversion factor will inevitably lead to a large amount of funds pouring into the gold market. Overall, driven by many factors such as "gold in troubled times" and the high certainty of the Federal Reserve's interest rate cut, gold is still in a strong cycle.