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driven by the interest rate cut cycle and the escalating situation in the middle east, the international gold price continues to rise!

on september 20, the spot gold price broke through $2,600 for the first time, setting a new record. london spot gold rose 1.37% to $2,621.5286 per ounce; comex gold futures rose 1.03% to close at $2,647.1 per ounce.

as the price of gold continues to soar, the price of domestic gold jewelry has also risen sharply. on september 21, the price of gold jewelry in many gold shops such as chow tai fook and lao feng xiang hit a high of 767 yuan per gram.

it is worth noting that the long positions of gold futures surged last week, and the world's largest gold etf positions also hit a new high since the beginning of the year, showing that the market is bullish on gold. however, physical gold consumption remains weak.

spot gold breaks through $2,600

gold has been almost unstoppable this year. london spot gold has soared from $2,000 at the beginning of the year. after fluctuating around the $2,400 mark, it broke through the $2,500 mark in mid-august.

in the early morning of september 19, the federal reserve announced a 50 basis point interest rate cut in september, bringing the benchmark interest rate down to 4.75%-5.00%, officially starting this round of interest rate cuts. the fed has initiated positive easing expectations, which has increased the attractiveness of gold, which does not pay interest.

on september 20, the spot gold price broke through $2,600 for the first time, setting a new record. as of the close, london spot gold rose 1.37% to $2,621.5286 per ounce. comex gold futures rose 1.03% to close at $2,647.1 per ounce.

so far this year, the increase in london spot gold has reached 27.12%, which has exceeded the 25.10% in 2020. if it continues until the end of the year, it will be the largest annual increase in nearly 14 years.

"geopolitical risks such as ongoing conflicts in gaza, ukraine and elsewhere will ensure that safe-haven demand for gold is maintained," forex.com analysts said in a report. at the same time, continued weakness in the u.s. dollar makes gold cheaper for holders of other currencies, providing an additional boost to gold.

commerzbank analysts said in a report that although the fed stressed that the sharp 50 basis point rate cut was the exception rather than the rule, the market did not seem convinced, increasing investors' interest in non-interest bearing gold. commerzbank said that traders expect another 75 basis points of rate cuts by the end of the year, and as long as these expectations persist, gold's rise should continue.

gold jewellery prices are rising

the continued surge in gold prices has also pushed up the price of domestic gold jewelry. according to data from jinshi.com, on september 21, the price of gold jewelry in many gold shops such as chow tai fook and lao feng xiang hit a high of 767 yuan per gram.

however, physical gold consumption remains weak. the world gold council said that the shanghai gold exchange's gold outflow in august was 102 tons, up 17% month-on-month, but down 37% year-on-year. although seasonal factors (the major industry events are approaching and the peak sales season is coming in early october) have driven the gold outflow to achieve a month-on-month increase, the weakness of gold consumption continues to suppress the upstream physical gold demand.

founder securities said in a research report that the consumption performance during the mid-autumn festival was stable. according to feedback from some dealers, the terminal market met expectations but no obvious turning point appeared. some stores increased discounts to more than 100 yuan per gram. with the continuous upward trend of gold prices, gold jewelry is expected to continue to be popular among consumers.

long positions surge, is gold speculative trading crowded?

as gold prices continue to hit new highs, many investors continue to be bullish on gold and increase their positions to bet on further increases in gold prices.

according to data from the u.s. commodity futures trading commission (cftc), comex gold speculators increased their net long positions by 25,900 lots to 252,600 lots in the week ended september 17. this shows that investors' safe-haven demand for gold has increased amid increased market uncertainty.

in addition, comex silver speculators increased their net long positions by 15,200 lots to 42,300 lots.

wei jianrong, a quantitative quant analyst at kaiyuan securities, said that according to the comex gold futures positions released by the cftc, the net long positions of managed funds representing speculative demand have experienced a significant upward trend since october 2023, and have now reached their highest level since 2020, and speculative trading is relatively crowded.

as of september 13, 2024, there are too few arbitrage traders under the managed fund category, which also points to crowding and gives a short signal; under the swap dealer category, there are fewer bullish people and the average position is lighter, giving short and long signals respectively; the cot signal recommends a position of -33.3%.

gf securities pointed out in its research report that the fed's first 50bp rate cut was a "big start" and actually implies "recession rate cuts". the short-term impact on the market is not small. the decline in gold prices after the upward attempt also shows that the pressure of profit realization after the "shoes drop" is being released. in the short term, the pressure for gold prices to rise further is relatively large. at the trading level, it is necessary to pay attention to and be cautious about the resistance zone of us$2,600-2,650. however, short-term trading disturbances have not shaken the deep logic of this round of gold bull market. the substitution of the us dollar and the "currency anchor" are still the long-term driving forces for the slow rise of gold prices.

it is worth noting that as an important barometer of the global gold market, the holdings of the world's largest gold etf, spdr gold trust, increased by 1.43 tons from the previous day, and the current total holdings are 875.39 tons, a record high since january 2 this year. the increase in spdr gold trust's holdings reflects the rising market demand for gold.

although spdr gold trust's holdings hit a new high this year, there is still a significant drop compared to the high of 1,270 tons in 2020. the current cumulative net inflow is at a low level since 2020, which also means that there is still a lot of potential for capital inflows into gold etfs.