① Gold prices may experience a short-term correction. Specifically, attention should be paid to the performance of the $2,285 support level to maintain the price above or continue to oscillate. ② In the medium to long term, many industry insiders believe that the investment value of gold is still bullish, and the upward trend may not have ended.
On June 11, Cailianshe News (Reporter Wang Hong) With multiple factors affecting the gold price, it has fallen in the past two days, dropping below $2,300/ounce at one time, and gold-related stocks have fallen sharply at the opening today. Analysts point out that gold prices may experience a short-term correction. Specifically, attention should be paid to the performance of the $2,285 support level to maintain the price above or continue to oscillate.
The World Gold Council's latest statement pointed out that global gold mining will be difficult to sustainably increase production. However, experts say there is no need to be overly concerned as difficulties in mining and decreasing mineral resources are not new developments, and the price of gold is affected by multiple factors, with production not being a major one. In the medium to long term, many industry insiders believe that the investment value of gold is still bullish, and the upward trend may not have ended.
Gold prices are affected by multiple factors, and production is not a major one.
Gold demand remains strong. The World Gold Council recently stated that global gold mining will be difficult to sustainably increase production. Data from the council shows that in 2021, global gold production increased by 2.7%, while in 2022 it will only increase by 1.35%, and last year it only increased by 0.5%.
John Reade, Chief Market Strategist for the World Gold Council, said that global gold has gone through a rapid increase in production for about 10 years since 2008. Production capacity had basically peaked by 2018, with global gold production falling by 1% in 2020. Looking ahead, it will become increasingly difficult to explore and find gold mining reserves, and even if gold mines are found, obtaining mining permits, financing, and production and operation are becoming increasingly difficult.
What impact will the increasing difficulty of gold exploration and approval have on gold prices? Zhao Qingming, Deputy Dean of the Huijin Information Technology Research Institute, believes that production is not a key factor. "Difficult mining and reduced gold ore is not a new trend. Even though gold still has the function of being the world currency, it no longer assumes the payment function among countries. The change in gold price is affected by multiple factors, of which production is not a major factor."
Lou Feipeng, a researcher at the China Postal Savings Bank, pointed out that gold, as a non-renewable resource, although technological progress has helped explore and develop recent situations, the total gold reserves on earth are limited, and the output is difficult to maintain rapid long-term growth, which is also an important factor supporting the gold price.
Gold prices are likely to rise in the medium to long term.
Recently, the gold price has fallen due to multiple factors. In response to the first suspension of gold buying by the People's Bank of China in 18 months, spot gold fell from a high of $2,387 to $2,330 on June 7, then continued to plunge due to non-farm data in the US market, falling to a low of $2,286.6 and closing at $2,293.1.
Gold-related stocks fell sharply at the opening today, with Chifeng Jilong Gold Mining falling 6.98% and HK Zhongjin Mining falling more than 11% during the session.
Wang Yi, an analyst at China National Gold, said that the strong non-farm data on last Friday reduced market expectations for a US interest rate cut, and the US dollar rebounded sharply, stimulating a large drop in gold prices. Considering the current trend of gold prices, attention should be paid to the performance of the $2,285 support level from the perspective of the upcoming interest rate announcement on June 11-12. Breaking below will open up medium-term adjustment space. Conversely, maintaining above $2,285, the gold price will continue to oscillate in the flag-shaped range.
"Although the general direction is bullish, gold prices are already overvalued historically, with room and potential for short-term corrections," Zhao Qingming said.
Lou Feipeng believes that in the near term, the price of gold has experienced a trend of fluctuations and declines after the previous high, but it is generally short-term volatility and adjustment. In the long run, gold itself is a safe-haven asset. In the face of global economic uncertainty and changes in monetary policy, it is likely to maintain an upward trend in the medium to long term, and the investment value of gold is still bullish.
China International Capital Corporation also pointed out when looking forward to the trend of major asset classes in the second half of the year that the upward trend of gold prices may not have ended. "From a cyclical perspective, due to downward pressure on the global economy in the second half of the year, if US bond yields may fall back to the interest rate center, the price of gold is expected to climb to $2,400/ounce. Gold also has the function of hedging geopolitical risks. If geopolitical risks escalate in the second half of the year, it will further provide space for the rise in gold. In addition, the continued purchase of gold and expansion of US debt by central banks around the world will continue to support the price of gold in the medium to long term."