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这个世界仍然非常利好黄金,今年料波动巨大

This world is still very Bullish on Gold, and significant fluctuations are expected this year.

Golden10 Data ·  Jan 14 02:58

Gold is overbought and faces a correction in the short term, but strong fundamentals indicate that the long-term upward trend of gold should continue.

The extraordinary performance of Gold in recent years may continue, as government extravagance has heightened structural inflation risks and increased the likelihood of sovereign nations restarting their printing presses.

Central banks have been a key driver of the recent rise in Gold, as persistent inflation and the weaponization of the dollar have spurred demand for reserve diversification.

However, with Gold being overbought, it may face a correction in the short term. Nevertheless, strong fundamentals suggest that Gold's long-term upward trend should continue.

As Bloomberg macro strategist Simon White pointed out, despite the rapid appreciation of the dollar and rising real yields, Gold has recorded its strongest annual return since 2010. Surprisingly, it is also one of the few assets this century to significantly outperform the strong S&P 500 Index.

Demand is primarily driven by central banks. In a world where the USA is willing to weaponize its currency against those seeking a non-U.S.-led global order, reserve diversification has become increasingly attractive. This is a consideration for Emerging Markets, while their Developed counterparts are also accumulating Gold at a faster rate. They aim to hedge against the second largest risk to the dollar and other fiat currencies—government generosity in spending.

In the years leading up to the pandemic, fiscal policies in the USA and other Developed Markets underwent significant changes, with governments tending to rapidly expand pro-cyclical spending. A straightforward way to understand the impact of this trend is to look at the widening gap between fiscal deficits and unemployment rates.

For decades, both moved in tandem, with small deficits complementing low unemployment rates. However, in recent years, even with unemployment rates remaining low, governments have increased net spending. "The Fed Backstop" has transformed into "Fiscal Backstop," as governments increasingly assume the role of the primary rescuer.

However, the market is not blind. It understands what this means for the actual value of long-term US Treasury bonds, German bonds, and United Kingdom bonds.

Since the USA severed the link between Gold and the dollar in 1971, the purchasing power of the dollar and other fiat currencies has significantly declined. As long as sovereign countries have greater motivation to print money to cover huge fiscal deficits, there is little hope for recovery.

On the other hand, Gold cannot be printed. Its extraction rate is similar to the long-term GDP growth rate, and its purchasing power has remained stable. During Roman times, one ounce of Gold was enough to buy a quality robe. Today, one ounce of Gold is about $2600, which can buy a well-crafted suit.

However, no asset fluctuates in a straight line. The recent outstanding performance of Gold has led to it being overbought, and a correction may be likely.

This is not limited to dollar pricing: Gold has recently set historical highs relative to the currencies of every major Emerging Markets and Developed Markets, a scenario that has not occurred since the fourfold price increase in 1979 and 1980.

Historically, January has been the best month for Gold performance. Thus, although Gold prices may initially remain supported, once the Bid weakens, the downward trend may reappear.

Downward momentum often scares off retail investors and exacerbates selling. Central bank purchases may decrease, and the demand from Asia, which is a key component of the expected rise in 2024, may also dwindle. Furthermore, if inflation in the USA shows no progress, a slightly hawkish stance from the Federal Reserve will push global real yields up, which typically is unfavorable for Gold prices.

It is also noteworthy that the rise in Gold stalled after Trump won the election last November. The president-elect's shift toward Cryptos may encourage more investors to view this asset class as a viable alternative to Gold.

Even so, Gold is only 6% away from its all-time high, indicating that there is still a demand for physical hedging against financial uncertainty.

Therefore, this year could be a volatile one for Gold, with prices experiencing a correction at some point. However, as the fundamental reasons for Holding Gold—sovereign easing, currency depreciation, and geopolitical uncertainty—are more relevant than ever, the market may increase Shareholding at lower prices, keeping the long-term upward trend intact.

Editor/Rocky

The translation is provided by third-party software.


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