Remarkably, gold has recently reached new heights. During the Spring Festival holiday, international gold prices experienced fluctuations upwards, continuously refreshing historic highs. As of the evening of February 3, the price of gold in London surpassed $2817.1 per ounce, while COMEX futures exceeded $2850 per ounce. 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 aversion. The 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 measures. This 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. The premium attached to COMEX gold futures over London spot prices also signifies profitable arbitrage opportunities. Additionally, 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 increases. Chief 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 market. In 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.S. detracted from its commodity appeal. Moving 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.S. dollar likely to continue propelling gold prices upward. In the long term, the implications of DeepSeek on U.S. tech 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 Securities. Although the U.S. is 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. Recent declines in the effective interest rates of 10-year U.S. Treasury bonds, combined with growing risk aversion, have collectively driven gold prices higher.