1. Current gold price trend

Historical high: Since April 2024, the international spot gold price has exceeded US$2,400/ounce (as of mid-April), with a year-to-date increase of more than 15%, setting a record high. The domestic Shanghai Gold Exchange Au99.99 price has simultaneously climbed to about RMB 580/gram.

Volatility characteristics: The gold price showed an "accelerated rise" trend from March to April, and the daily fluctuation range increased significantly (for example, the daily fluctuation range in April exceeded 3%).

2. Core reasons for the price increase

(1) Geopolitical risk drive

Middle East and Russia-Ukraine conflict: The escalation of the Iran-Israel conflict and the prolonged Russia-Ukraine war have intensified the market's risk aversion demand, and the attractiveness of gold as a "safe asset" has increased sharply.

Global uncertainty: The US election and European political turmoil (such as the rise of far-right forces in France) have further pushed up risk aversion sentiment.

(2) Expectations for the Federal Reserve’s Monetary Policy

Expectations for interest rate cuts are rising: Although inflation in the United States is highly sticky, the market generally predicts that the Federal Reserve will start a rate cut cycle in 2024 (possibly starting in September). The expectation of a downward trend in real interest rates is good for gold (gold is interest-free, and the opportunity cost is reduced in a low interest rate environment).

Weakened US dollar: The US dollar index has fallen from its highs, and gold and the US dollar are usually negatively correlated.

(3) Central banks continue to increase their holdings

Global central bank gold purchases: In 2023, global central banks purchased 1,037 tons of gold (data from the World Gold Council), and China, Poland, Turkey and other countries continued to increase their reserves. This trend has not diminished in 2024, and the People’s Bank of China has increased its gold holdings for 17 consecutive months (as of March).

De-dollarization demand: In order to reduce their dependence on the US dollar system, some countries have turned to diversifying their gold reserves.

(4) Investment and speculation demand

ETFs and retail investors are pouring in: SPDR Gold ETF holdings have rebounded, and the scale of gold ETFs in China and other Asian markets has expanded. Social media hype (such as the narrative that "gold will always rise") attracts retail investors to follow suit.

Long bets in the futures market: COMEX gold futures non-commercial net long positions hit a stage high.

3. Market controversy and risks

Bubble theory: Some institutions believe that the rapid rise in gold prices in the short term has deviated from fundamentals. Goldman Sachs warned of "correction risks", but the bulls believe that geopolitical support is still there.

China factors: The domestic gold price is significantly higher than the international price (once exceeded US$50/ounce), reflecting the safe-haven demand for RMB assets, but it may also imply arbitrage under capital controls.

Fed policy variables: If the rebound in US inflation leads to a delay in interest rate cuts, gold prices may be under pressure.

4. Impact on ordinary investors

Jewelry and consumption: The domestic gold jewelry price has exceeded 700 yuan/gram (including labor costs), and consumers have a phenomenon of "buying more as the price rises", but some have turned to light-weight products.

Investment advice:

The risk of chasing high prices in the short term is high, and you need to be wary of violent fluctuations.

For long-term allocation, you can focus on the anti-inflation function of gold in the asset portfolio (recommended to account for 5%-15%).

Pay attention to the risk that the domestic gold price premium may narrow.

5. Future Outlook

Bullish factors: continued geopolitical conflicts, central bank gold purchases, and the start of a rate cut cycle.

Bearish factors: the Fed's hawkish turn, easing conflicts, and profit-taking.

Institutional forecasts: Citigroup sees a high of $3,000/ounce (12-18 months), and Morgan Stanley believes that prices above $2,300 are unsustainable.