Source: Finance Federation Author: Peng Kefeng
① During the National Day this year, sales of gold chains increased by 892% year on year (September 29 to October 1, compared to three days before the 11th holiday last year). In addition, investment spending increased by 772%, and baby jewellery increased by 52%.
② Analysts believe that domestic gold prices are not greatly affected by the conflict between Palestine and Israel, but if international gold prices continue to rise, they will still spread domestically later, further driving up prices.
On October 7, local time, a new round of conflict between Palestine and Israel broke out, and the butterfly effect continued to spread. On Monday, October 9, the international gold price (commonly known as London gold) jumped higher to 1,851 US dollars/ounce, contrary to the trend that has continued to decline since September 25; domestic gold prices (commonly known as Shanghai gold) fell slightly to around 454 yuan/gram after opening. Basically, they maintained a steady pre-holiday trend and were not affected much by external markets.
Affected by the conflict between Palestine and Israel, what is the future trend of international and domestic gold prices, especially in the fourth quarter?
On October 9, a macro analyst at a brokerage firm told the Finance Federation reporter that the market originally expected the price of gold to bottom out in late October, but now it seems that the outbreak of the conflict between Palestine and Israel may cause it to bottom out ahead of schedule and rise. Under multiple factors, it is expected that international gold prices will continue to rise by the end of the year, and are expected to reach another record high.
The price of London gold rose from a “new low in nearly 7 months” after the conflict between Palestine and Israel
International gold prices are out of the roller coaster market this year. In the middle of this year, its price once reached 2,000 US dollars/ounce, but the trend was sluggish in the second half of the year. Take London gold now as an example. From September 25 to October 5, it has been falling for 9 consecutive trading days, continuously breaking new records for consecutive declines during the new year. On October 6, London Gold continued to decline for a while, but there was a slight recovery that night to stop the decline.
Judging from the data, it once dropped to 1814.8 US dollars/ounce on October 3, a record low in nearly 7 months, and the range drop was as high as 5.7%.
“Affected by multiple factors such as the strength of the US dollar, the price of gold dived in the first half of the month to be expected. According to our team's predictions, international gold prices should break out of a phased bottom in late October or the end of October, and will rise steadily after November.” A macro analyst at a brokerage firm told the Finance Federation reporter that the sudden outbreak of the conflict between Palestine and Israel has led to heightened risk aversion in international capital. This is also the reason for today's high gold prices. In his view, the impact of the war on gold prices was short-term. “The biggest help is probably to let international gold prices bottom out ahead of schedule. The price of 1,814 US dollars/ounce in the fourth quarter should not have been seen.”
The analyst further stated that the strong recovery of gold in the year was logically supported. Judging from various US economic data, whether it's a slump or a recession, they are all probabilistic events. Combined with the effects of other factors, international gold prices are expected to reach another record high by the end of the year.
Domestic: Gold prices are falling, but the consumption war does not prevent the gold investment boom from continuing
Affected by many factors, there has been a clear price difference between domestic gold prices and international gold prices recently, and the price of Shanghai gold has long been higher than London gold. However, during the National Day, the price of gold in Shanghai has dropped markedly, and the difference between international and domestic gold prices is no longer that obvious. Analysts believe that domestic gold prices are not greatly affected by the conflict between Palestine and Israel, but if international gold prices continue to rise, they will still spread domestically later, further driving up prices.
It is worth noting that during the 11th period, the gold consumption boom continued. According to local official media reports in Wuhan, as the price of gold fell during the holiday season, the weight of gold fell below the 600 yuan mark. In addition to the fact that stores launched holiday promotions, sales also skyrocketed. Some people bought gold bars worth one million yuan in one go.
On October 5, a piece of news about “Girl Gives Up Buying Diamond Rings and Spending 500,000 to Buy Gold Bars” hit the headlines, and once again brought the gold discussion boom to the forefront of public opinion discussions.
According to consumption data released by JD recently, the most popular jewelry during this year's holiday season is a “gold chain,” that is, a set of necklaces, earrings, and bracelets. During the National Day this year, sales of gold chains increased by 892% year on year (September 29 to October 1, compared to three days before the 11th holiday last year). In addition, investment spending increased by 772%, and baby jewellery increased by 52%.
“At present, domestic physical gold consumption continues to rise,” the analyst told the Finance Federation reporter. Judging from the situation of friends close to them, it is true that many people are buying or investing in gold through various channels during the 11th holiday season. Even if the price difference between international gold prices and domestic gold prices is no longer there, there is a trend of “the more it falls, the more it buys.” He believes that this national boom in gold investment and consumption will continue. The rise in international gold prices caused by the conflict between Palestine and Israel will also be transmitted to domestic investors. The boom in domestic physical gold consumption and investment in the fourth quarter cannot be underestimated.
According to statistics from the China Gold Association, in the first half of 2023, the country's gold consumption was 554.88 tons, an increase of 16.37% over the previous year. Among them, gold jewelry consumption reached 368.26 tons, an increase of 14.82% over the previous year; gold bars and coins were 146.31 tons, an increase of 30.12% over the previous year. According to data from the National Bureau of Statistics, gold and silver jewelry became the category with the fastest growth rate in the retail sales category in the first half of the year, and continued to contribute to driving economic growth.
“With regard to the boom in gold investment, the public should have a certain sense of risk.” The analyst said that most people buy physical gold, doudou gold, and gold jewelry. The price of these gold products is actually significantly higher than the price of Shanghai gold, because merchants will add processing fees, brand premiums, etc. when selling. When future investments are realized, their recycling prices generally refer to the price of Shanghai gold, not the price they originally purchased.
“As for commodities other than gold, excluding oil, the Israeli-Palestinian conflict has had little impact on the international or domestic market,” the analyst finally said that based on historical data modelling calculations of the conflict between Palestine and Israel since 2000, international oil prices are the beneficiaries, but the basic increase is around 4.5%.
edit/lambor