Financial Services Association, Feb. 1 (Reporter Peng Kefeng) In the early morning of February 1, the Federal Reserve's latest interest rate resolution was introduced, keeping current interest rates unchanged, shattering market expectations that interest rate cuts would begin in March. Affected by this, international gold prices rose for a while after opening today.

A CIFA reporter noticed that in 2024, gold will continue to be strong. At the close of trading on January 31, the international gold price (London gold) remained high at 2039.05 US dollars. Although compared to the price of 2062.74 US dollars when the market opened on January 2 this year, the overall price was still strong. Compared to the closing price of 1928.27 US dollars on January 31, 2023, international gold prices have increased significantly over the past year.

Can gold maintain last year's strength this year? When the date of the Fed's interest rate cut is uncertain, how should the investment value of gold be viewed?

Gold prices on both sides of supply and demand are still supported

Just how fervent was gold in the past year? Looking at futures prices, COMEX gold's cumulative increase for the full year of 2023 reached 13.45%, the biggest annual increase since 2020.

On December 4, 2023, the international gold price broke through the 2,100 US dollars/ounce mark, reaching a high of 2,152.3 US dollars/ounce, a record high. In January of this year, international gold prices remained in the price range above 2,000 US dollars, performing well.

In response, a macro analyst at a brokerage firm that has been engaged in gold futures and investment research for a long time told the Financial Federation reporter that since last year, there have been many factors that have contributed to the overall strengthening of gold, which can be described as taking advantage of time and place. On the one hand, geopolitical instability is the biggest factor in the rise in gold prices, and large amounts of capital are being squeezed into the gold investment market to take refuge; on the other hand, expectations that the Federal Reserve will cut interest rates after experiencing rapid interest rate hikes have also supported the strength of gold for a long time last year.

The analyst further said that from the perspective of supply and demand, the 2023 annual reports of the world's major gold producers and traders have not yet been released, but according to last year's semi-annual reports, the capital expenditure of these manufacturers has not increased. Judging from other public information, this means that the current gold supply of major gold producers has not increased. Currently, global gold production may still be in a contraction range, which means that the supply of gold will not increase significantly in the short term. This also supports the strength of gold. Therefore, in the next few years, gold should still be in an overall upward cycle, and the probability of a rollercoaster collapse is very small.

International gold prices are still expected to rise before the Federal Reserve introduces interest rate cuts

A Financial Services Association reporter noticed that according to the latest report released by the World Gold Council, gold demand for 2023 (including OTC transactions and other sources) was 4,899 tons, the highest since 2010.

In response, economist Song Qinghui told the Financial Federation reporter that currently, investment risk aversion due to geopolitical risks is quite strong. Coupled with the risk of rising inflation it may bring, it is expected that international gold prices will continue to rise this year.

However, the analysts mentioned above remain somewhat cautious about the trend of gold this year. In his view, since the end of last year, geopolitical risks have further increased, the conflict between Palestine and Israel has not come to an end, and the Red Sea crisis has unfolded. This has indeed become a favorable factor driving international gold prices to continue to rise this year. However, the Federal Reserve's interest rate hike process is also an important factor affecting the price of gold this year. According to previous research conducted by its team, the international gold price may be high at around 2,300 US dollars. In the short term, gold will continue to be strong in the first half of this year.

“One confirmed fact is that the price of gold will continue to rise until the Fed's interest rate cut is introduced.” The analyst believes that investors need to pay close attention to the Fed's policy shift. Gold has high investment value until interest rate cuts occur, but a channel for interest rate cuts has opened. Judging from historical experience, short-term fluctuations in international gold prices are inevitable.