goldfishcasinoslots| Is the rushing gold really unable to stop the car?

Source: CMEGroup of Zhi Merchants Institute

Witness history every dayGoldfishcasinoslotsPrecious metal

Precious metals are really expensive! May 20thGoldfishcasinoslotsSpot gold reached $2450 an ounce at one point, surpassing the intraday high set in April.

Looking back at the trend of gold prices this year, gold has entered a long pull cycle since the beginning of March, rising all the way from the $2100 mark to the $2200 mark. Spot gold and COMEX gold once reached 2152 in intraday trading on March 6.Goldfishcasinoslots.11 US dollars per ounce, 2160Goldfishcasinoslots.7 US dollars per ounce, surpassing the record high of international gold prices set in December for the first time. Just two trading days later, spot gold broke through an all-time high again on March 8, within striking distance of $2200 an ounce. Since then, although the gold price has undergone a short period of consolidation, in late March, the gold price once again set a record of 2236.05 US dollars per ounce.

In the second quarter, the international gold price continued the "strong" market in March. In the fiercest rise in early April, gold prices are "witnessing history every day". Until April 19, after the spot gold price hit $2419 an ounce in intraday trading, the gold price experienced a correction, falling below the $2300 mark at one point, but another steady rally followed. Since May, the price of gold has been in a volatile upward range until it hit a new high on May 20.

What is the reason why the gold "brake" does not stop?

Is it true that gold can't brake? Behind this wave of gold price rise, the frequent geopolitical events, the continued global uncertainty, the gradual realization of the Fed's interest rate cut expectations and the fall of the dollar are intertwined to promote the gold market boom.

First, the frequency of geopolitical events has made global investors worried about the economic outlook. From the conflict between Russia and Ukraine to tensions in the Middle East to tensions in Asia, these events have brought uncertainty to the global economy. In particular, on May 19, the helicopter carried by Iranian President Leahi crashed in the northwestern province of East Azerbaijan, killing Lehi, Foreign Minister Abdullahiyan and other entourage. This boosts risk aversion in the market and supports the price of gold as a safe haven asset. In this context, investors generally seek safe-haven assets, and gold, as a traditional hedge tool, has naturally become the first choice for investors.

Second, the rising momentum of gold has also been exacerbated by the continued global uncertainty. With the rise of global trade protectionism and the intensification of climate change and other problems, the prospects for global economic growth are facing many challenges. In the context of this increased uncertainty, investors' confidence in traditional assets such as stock and bond markets has declined, turning their money into safe-haven assets such as gold.

In addition, the gradual implementation of the Fed's interest rate cut expectations has also had a positive impact on the price of gold. Gold prices were also supported by lower-than-expected US inflation data released last week and rising expectations that the Fed would cut interest rates twice this year. The US consumer price index (CPI) fell back in April as a whole. Us CPI rose 0.3 per cent month-on-month in April, down from 0.4 per cent in March and 3.4 per cent year-on-year, down slightly from 3.5 per cent in March. Excluding volatile food and energy prices, core CPI in the US rose 0.3 per cent in April from a month earlier and 3.6 per cent from a year earlier, both lower than in March.

With the weakness of US economic data and the trend of slowing global economic growth, the Fed's expectations of interest rate cuts are gradually increasing. The market now expects the Fed to cut interest rates by at least 25 basis points at its September meeting at 63.3%, according to the Chicago Mercantile Exchange's Fed watchdog. The interest rate cut will reduce the cost of holding gold and increase the relative yield of gold, thus attracting more investors to enter the gold market.

Finally, the fall of the dollar also supported the rise in the price of gold. As an international reserve currency, the trend of the US dollar has an important impact on the price of gold. Recently, the dollar index has continued to fall as global trade tensions have intensified and US economic data have been weak. The fall in the US dollar will lead to a relative rise in the price of gold denominated in dollars, further attracting investors to enter the gold market.

Can the soaring gold continue to be bought?

Under the support of many factors, gold really does not seem to brake, but does this mean that gold will continue to soar, can investors continue to buy?

In the long run, as a safe haven asset, the investment value of gold is widely recognized. In the context of increased global economic uncertainty and frequent geopolitical events, the risk aversion attribute of gold will be further highlighted. In addition, with the gradual realization of the Fed's interest rate cut expectations and the continuation of the downward trend of the dollar, the price of gold still has room to rise.

However, investors also need to pay attention to risk control when buying gold. Spot gold tumbled more than $40 to below $2380 an ounce to close at $2378.44 on May 22. The Fed minutes issued hawkish comments that strengthened the dollar and hit gold prices. This also shows that the gold market is full of huge volatility risks, investors in asset allocation, need to use some derivatives tools to hedge the risk.

The gold futures of Chicago (product code GC) is a very good derivatives tool, and it is also one of the most widely traded futures products in the world. Have abundant liquidity, daily trading volume is close to 27 million ounces; higher capital efficiency: participate in metal futures trading on an exchange; use physical settlement: because futures contracts are closely related to the spot market, so it is possible to reduce slippage costs; close to 24-hour electronic trading: it is easier to manage positions when global news and events affecting gold prices occur. In addition to standard gold futures contracts, Chicago also offers smaller mini gold futures contracts (QO) and mini gold futures contracts (MGC).

To sum up, although the international gold price has skyrocketed recently, investors still need to pay attention to risk control when buying gold. The allocation of gold futures in the investment process also provides investors with an opportunity to diversify their portfolios. By combining gold futures with other financial instruments (such as stocks, bonds, etc.), investors can reduce the risk of the whole portfolio and improve the stability of returns.

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