gold hits new high for four consecutive times! gold may break through $2,700 this week. is it still a good time to buy?
2024-09-26
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on wednesday, the international gold price hit a record high for the fourth consecutive day. the main gold contract of the new york mercantile exchange (comex) further approached the $2,700 mark, and pushed the shanghai futures exchange gold contract to break through $600 for the first time. in addition to the policy support of the central bank, geopolitical factors and etf buying have also become important drivers. with institutions optimistic about the market, whether funds will choose to continue buying will become a highlight.
multiple positive factors drive gold prices soaring
gold prices have surged nearly 30% so far this year, making it one of the best-performing commodities. a new round of easing by global central banks has fueled bullish sentiment, with comex gold futures up more than 3% since the federal reserve cut interest rates last week.
it is worth noting that less than a week after the interest rate meeting, the fed's november rate cut pricing has risen again. previously, the conference board's consumer confidence index fell from 105 to 98 in september, the largest monthly drop since mid-2021, indicating that the weak job market and high cost of living have caused people to feel anxious, thus once again sounding the economic alarm.
"it's often alarming to see consumer confidence drop so much," jamie cox, managing partner of harris financial group, said in an emailed comment. "consumers are clearly worried about the impact of the upcoming election and high food and credit costs. the fed's interpretation of the next rate cut, combined with this data, seems to be more correct for 50 basis points."
according to the chicago mercantile exchange's interest rate monitoring tool fedwatch, the probability that the federal reserve will cut interest rates by another 50 basis points at its next policy meeting in november has risen to 57% from around 40% after the meeting.
at the same time, central banks around the world continued to buy gold. the world gold council (wgc) said that central banks' net purchases in july were 37 tons, up 206% from the previous month, the highest monthly increase since january this year. although prices are likely to have a certain impact on global central banks' demand for gold, the long-term trend of net gold purchases continues.
geopolitical turmoil also provided support for gold prices, as people are worried that the conflict between israel and lebanon could make the already tense situation in the middle east worse. vaneck commodity strategist roland morris believes that now is the time to increase commodity exposure. "china's stimulus plan, the fed's interest rate cuts and the decline of the us dollar should be beneficial to all commodity industries. in the long run, deglobalization, energy transition and geopolitical conflicts are all risks to commodity supply." he believes that the huge and growing debts and deficits of western countries are also expected to become an important factor supporting gold prices.
gold etf is expected to become a new driving force
capital flows show that a large number of western investors are buying gold through exchange-traded products (etps) or exchange-traded funds (etfs), and the gradual increase in holdings will gradually be reflected in market prices.
according to statistics from the world gold council, global gold etfs had a net inflow of 28.5 tons, or $2.1 billion, in august. developed countries contributed the largest share, with north america adding 17.2 tons, or about $1.4 billion.
yicai global's reporter found that many institutions have recently expressed their bullish stance on gold until 2025. standard chartered bank analyst suki cooper said: "now that the rate cut cycle has begun, we believe that etp inflows may accelerate, supporting the next round of gold price increases. etp flows are usually more strongly correlated with real yields and the us dollar. most of the inflows came from europe, but in the past two months, north american investors have shown new interest."
ubs released a report saying that despite setting new highs this year and outperforming major stock indexes, gold has more room to run in the next 6 to 12 months. "we believe that key factors include the recovery of large inflows into exchange-traded funds (etfs), which has been missing since april 2022."
jpmorgan also believes that retail etfs will be the key to further sustained gains in gold prices, and expects gold prices to move towards the peak target of $2,850 in 2025. "strong physical demand from china and other central banks has supported gold prices over the past two years, but retail-focused etf positions continue to be the key to further sustained rebounds in gold in the upcoming fed rate cut cycle."
there is also a cautious view in the market. ole hansen, head of commodity strategy at saxo bank, said: "the basis for the current new etf demand is that interest rates are falling, but this leaves the question of whether investors are willing to buy at such high prices."
in its research report, citic securities believes that the 50 basis point rate cut by the federal reserve in september is good for gold prices, but the market has already traded sufficiently in the early stage, and the slowdown in the us economy and inflation behind the rate cut will suppress the gold price in the future. the current position has already risen too much, and it is recommended to take profits at high levels in the short term.
attached is the latest forecast target of wall street institutions
goldman sachs: $2,700
jpmorgan chase: $2,850
citi: $2,800-3,000
anz bank: $2,900
bank of america, macquarie: $3,000
(this article comes from china business network)
