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    2019 gold or welcome to the bull market, the price of gold 999 per gram rose to 353 yuan

    2019-02-10 11:02:14

    International Finance News

    "From the beginning of the twelfth lunar month, after the workers in the field returned to the city, in front of the gold jewelry counter in the mall, the gold chain is like a person who does not need money. It is surrounded by three layers of people outside." This is a consumer's eyes." The phenomenon of gold is hot. In fact, this year's Spring Festival, many shopping malls did appear to snap up the zodiac gold scene, the price of the full gold 999 rose from 345 yuan per gram to 353 yuan.

    In fact, it is not only because of the holiday that the price of gold has risen, because the global fear that trade friction may aggravate the slowdown of global economic growth, some analysts believe that the price of gold may continue to rise in 2019.

    Recently, affected by the slowdown of the Fed’s interest rate hike, the arrival of a strong dollar has caused a slight decline in the price of gold that has risen for some time. At noon on February 8th, Beijing time, the spot gold price was 1309.34 US dollars / ounce, and the US gold futures price was maintained at 1313.1 US dollars / ounce.

    John Sharma, an economist at the National Australian Bank, said: “Some economic growth indicators have clearly shown that global economic activity will slow down and trade volumes are suffering. This will keep people cautious. Attitude, gold prices are expected to be supported at around $1,300 per ounce to $1,330 per ounce."

    Fed or cut interest rates

    The Fed's every move is the key to affecting the price of gold. On the morning of February 7, US Eastern Time, Federal Reserve Chairman Powell said in a speech organized for educators that the US economy is still in good shape, the unemployment rate is at a low level, and the inflation rate is close to the target level of 2%. Income inequality and sluggish productivity will be the biggest challenges of the next decade. On the same day, Powell did not explicitly disclose the intention of the Fed to cut interest rates, but the market parties still raised the expectations of the Fed to cut interest rates.

    It is worth emphasizing that just before Powell’s speech, former Federal Reserve Chairman Janet Yellen bluntly stated that if the global economic slowdown affects the United States, it is likely to cut interest rates.

    On February 6, Janet Yellen said in an interview with CNBC that the weakness of economies such as the Eurozone is threatening the already strong US economy. The Fed must rely on the latest economic data to determine whether its next policy is to raise interest rates or cut interest rates. . "If the global economic growth really weakens and spreads to the United States, then the US financial environment will be more tight, and we do see that the US economy is weakening, then the next step may of course be to cut interest rates."

    This is not the first time Yellen has published a rate cut speech. Earlier at the National Retail Federation (NRF) annual exhibition, she also said: "If the global economy is down, and spillover effects affect the United States, we are very likely to have witnessed the last rate hike in this round of interest rate hikes. It is perfect for the US to raise interest rates once or twice, but nothing is in the default path. I expect the Fed to take a breather and assess the current economy before the next move."

    Affected by dovish speech, the price of gold rushed to a high of $1,326 per ounce last Monday, which impressed the market. According to industry insiders, the dovish signal released by the Fed has caused the US dollar index to fall back, giving gold and silver the power to break through the resistance above, and the gold price will benefit from it.

    In addition, the European Commission also sharply lowered its forecast for the economic growth of the Eurozone in 2019 and 2020 on February 7, and people are not optimistic about the prospects of trade friction, and can only seek hedging tools.

    Central banks buy gold to support gold prices

    In addition, the news that central banks increased their holdings of gold also supported the expectation that gold prices will continue to rise. The news shows that central banks are increasing their holdings of gold, which is nearly doubled in 2017. It has once again become a big buyer in the gold market, and the amount of gold purchased has also set a new record after the end of the Bretton Woods system.

    Recently, the People's Bank of China re-held gold, and spent 3 billion yuan to buy 9 tons of gold. In December 2018, China’s central bank’s gold reserves increased by 320,000 ounces. At the same time, according to data released by the SAFE in early January, the central bank's gold reserves reached 59.56 million ounces (1688.495 tons) at the end of December last year, compared with 59.24 million ounces at the end of November.

    In addition to China’s central bank’s massive purchases, central banks have also launched “buy gold models”. Russia, Turkey, India, Mongolia and other countries have increased their holdings of gold.

    The Russian central bank increased its gold reserves by 275 tons in 2018, making it the fifth largest gold reserve country in the world. On January 18, the Russian Central Bank released the latest data showing that the Russian central bank's gold reserves increased by 14.9% (nearly 275 tons) in 2018, reaching 2,112 tons (67.9 million ounces), becoming the fifth in the world after the United States, Germany, France and Italy. Big gold holder. The central bank said that the country's gold reserves are still increasing in early 2019. The US gold reserve is 8,130 tons, Germany is 3,370 tons, Italy is 2,450 tons, and French reserves are 2,440 tons.

    In addition, some countries that have not favored gold for a long time have also joined the pace of buying gold. The Polish central bank’s gold reserves are currently at their highest level in 35 years. The Hungarian central bank has increased its holdings of gold for the first time in 32 years, and its gold reserves have soared directly from 3.1 tons to 31.5 tons.

    According to the "Gold Demand Report of 2018" issued by the World Gold Council, the amount of gold purchased by major central banks in the world increased by 74% in 2018, which is nearly doubled compared with 2017, reflecting the demand for further diversified asset allocation by emerging market central banks. In 2018, global gold demand increased by 4% to 4345.1 tons, which is basically the same as the five-year average of the global market. Under the condition that global demand for gold ornaments is basically stable, the demand in the Chinese market has rebounded to a new high in three years.

    In an interview with the International Finance News, Wan Yijing, a precious metals analyst at Galaxy Futures, said that in the current situation, buying gold is undoubtedly a better asset allocation. Moreover, due to the expectations of the global economic downturn, central banks have become the biggest consumers of gold, and central banks have also tried to resist the economic crisis by buying gold, which is why the recent increase in holdings of gold by multinational central banks.


    Gold bull market can be expected

    Shen Xinjie, a precious metals analyst at Shenyin Wanguo Futures, also told the International Finance News that although gold is less volatile than other assets, it can optimize the risk-return and diversity of the portfolio, especially in the world. Excellent performance in an environment of economic slowdown and rising geopolitical risks. “Overall, we are optimistic about the performance of gold prices in a longer time dimension. It may reach the position of $1,350-1,400 per ounce during the year.” It is recommended that investors have at least a certain allocation of gold in their portfolio, 20% in the current environment. -30% of the configuration is more suitable, but may not be the highest in the short term, you can create a position after a certain callback.

    Galaxy futures also believes that the recent impact of the Fed news, the price of gold on the offensive is fierce, the lack of upward momentum of the dollar after the shock, can not stand the pressure. Under the expectation of a weaker rate hike by the Fed, gold prices will move higher this year than last year, but the upside will depend on whether the US economy has experienced a sharp decline.

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    Editor in charge: Li Limeng RF13188

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