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Inflation rates have also been erratic, leading to heightened market concernsIn this shifting economic climate, investors are inclined to protect their wealth by allocating more towards gold to ensure the preservation of their assets amidst volatilityThis burgeoning appetite for gold highlights its role as a hedge against economic uncertainties.
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Historically, periods marked by high risk aversion and easing monetary policy often lead to sustained increases in gold pricesHowever, this does not imply that investors can disregard potential market dynamicsFluctuations in the U.Sdollar exchange rates and the overall performance of commodity markets can also influence gold pricesAlthough the current conditions are conducive for gold investment, short-term volatility may still occurInvestors are thus urged to assess their risk profiles and objectives carefully to devise a prudent strategy that embraces opportunities to buy on dips, indicating a long-term approach to capitalize on stable returns.
Remarkably, gold has recently reached new heightsDuring the Spring Festival holiday, international gold prices experienced fluctuations upwards, continuously refreshing historic highsAs of the evening of February 3, the price of gold in London surpassed $2817.1 per ounce, while COMEX futures exceeded $2850 per ounce
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However, by February 4 at 6:35 PM, reports indicated a slight decrease in both London spot gold and COMEX gold futures prices.
In light of this situation, analysts from various institutions suggest that tariff policies could steer the global economy toward uncertainty, thereby highlighting market unease and a heightened risk aversionThe ongoing geopolitical tensions have also failed to stabilize as previously anticipated, contributing to the uptick in gold prices.
According to the analysts at Fangzheng Zhongqi Futures, “The surge in risk aversion is the direct catalyst behind the rise in international gold prices.” On January 30, the Federal Reserve announced that it would maintain the federal funds rate target range at 4.25%-4.5%, adhering to the existing schedule for tapering its quantitative easing measuresThis marked the first time since last September that the Fed opted against lowering rates, aligning with market expectations and facilitating a reaction where gold prices remained high post-announcement.
Furthermore, the Commodity Research Institute at MUC markets observed a remarkable increase in physical gold demand in London, primarily sourced from the United States and global central banks
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The premium attached to COMEX gold futures over London spot prices also signifies profitable arbitrage opportunitiesAdditionally, central banks around the world continue to purchase gold, thereby underpinning the upward trajectory of gold prices.
Meanwhile, the process of de-dollarization is anticipated to bolster demand for gold, resulting in further price increasesChief economist Lu Zhe from Dongwu Securities noted that the impact of DeepSeek on American tech stocks may reinforce the logic of de-dollarization, enhancing the long-term case for gold.
Looking forward, many institutions predict that short-term volatility in gold prices may be exacerbated by concerns over tariffs affecting buying behavior in the gold marketIn the medium-term, gold prices are likely to remain elevated.
According to analysts at Fangzheng Zhongqi Futures, the Spring Festival holiday typically represents a peak consumption period for precious metals, coinciding with a surge in gold purchases from India, adding upward pressure on prices
During the holiday period, silver prices followed gold's upward trajectory, but pressure from increased tariffs in the U.Sdetracted from its commodity appealMoving forward, the main contracts for domestic precious metals are expected to open at favorable levels post-holiday.
Lu Zhe further speculated that rate-cut trades may resurface as early as March, with a weakening U.Sdollar likely to continue propelling gold prices upwardIn the long term, the implications of DeepSeek on U.Stech stocks might only be the beginning as de-dollarization perspectives could establish steady and sustainable support for rising gold demand.
"Gold serves dual functions as a safe haven and a hedge against the credit risk of the dollar; hence I am optimistic about gold in the medium to long term," remarked Dai Kang, Director General of Research Center at GF SecuritiesAlthough the U.Sis tightening its fiscal policies, the persistence of a 'loose fiscal' stance and ongoing debt issues continues to undermine the credibility of the dollar, particularly in light of increasing global geopolitical risks that further bolster gold demand