① How will the Fed's interest rate cut affect the price of gold? ② How much gold did central banks around the world increase in the first quarter of this year?
Financial Services Association, May 10 (Editor: Hu Jiarong) Driven by external news, Hong Kong gold stocks performed well in early trading today. Among them, Lingbao Gold rose by as much as 6%. As of press release, Zhaojin Mining (01818.HK), Lingbao Gold (03330.HK), Shandong Gold (01787.HK), and Zijin Mining (02899.HK) rose 1.98%, 1.62%, 1.55%, and 0.91% respectively.
Note: Performance of gold stocks
In terms of news, the US Department of Labor released data on Thursday. The number of people applying for unemployment benefits in the US unexpectedly rose to the highest level since August at the beginning of last week. The number of initial jobless claims increased by 22,000 to 231,000 in the week ending May 4. The economists surveyed predicted a median value of only 212,000. This is the latest sign that the US job market is cooling down. The US non-farm payrolls data for April released last week fell short of expectations, thus boosting the market's bet on the Fed's interest rate cut this year.
In fact, once the Federal Reserve's monetary policy enters a cycle of interest rate cuts, this will have an important impact on the international commodity market and will also help strengthen gold prices. Take yesterday's COMEX gold trend as an example. This variety surged 1.33% on the same day to close at 2353.1 US dollars.
Note: COMEX gold's recent trend
Currently, COMEX gold continues to strengthen. At press time, it had risen 0.67% to $2,356.
Apart from the market betting that the Federal Reserve will cut interest rates, the situation in the Red Sea continues to be tense recently. On May 9, local time, Yemeni Houthi spokesman Yahya Sareya said in a televised speech that the Houthis attacked several ships linked to Israel. Targets include the “Diego” and “Gina” in the Gulf of Aden. The group also attacked the “Victoria” twice in the Indian Ocean and the Arabian Sea, respectively. Also, according to CCTV news, on May 9 local time, a huge explosion was heard in Hodeidah, Yemen.
The central bank increased its gold holdings in the first quarter to boost the price of gold
According to the World Gold Council recently released the “Global Gold Demand Trend Report” for the first quarter of 2024, the report shows that total global demand for gold (including OTC transactions) increased 3% year-on-year to 1,238 tons in the first quarter, which is the strongest demand performance for the first quarter since 2016. Total global demand for gold in the first quarter without OTC trading fell 5% to 1,102 tons compared to the same period in 2023.
A senior market analyst at the World Gold Council said that looking ahead, based on gold's recent performance, the return on gold in 2024 may be much higher than what we expected at the beginning of the year.
Huatai Securities pointed out that from a long-term perspective, the share of gold in global reserves is still at an all-time low. Even if gold reserves continue to increase at the rate since 2022, the share of gold in central bank reserves will still have a “climbing period” of more than ten years before returning to 1990 levels. The central bank's purchase of gold structurally supports demand for gold, compounding the supply of gold into a “bottleneck period”, which means that gold prices may still have considerable room to rise.