— This is the script of CNBC's news report for China's CCTV on July 10, 2020, Friday.
Gold futures, the main contract on the New York Mercantile Exchange, are up 26.15% so far this year, compared with a 2.44% drop for the S&P 500. Under the recent strong rebound in the stock market, the price of gold has not lost its upward momentum and has broken the important mark of $1800/return for the first time since 2011. The reason for this rally is that, in the words of analysts, the global macro picture has provided the perfect environment for gold.
Uncertainty over the development of the global epidemic and the resulting recession have made gold a safe haven. The super-loose monetary policies of the world's central Banks have helped to counter the impact of the pandemic. While central Banks have continued to buy gold, people have become more aware of saving in the wake of the epidemic. In addition, the epidemic has also had some negative effects on gold production, which, though not too great, cannot be ignored. In addition, we also face many uncertainties such as global geopolitical risks and the US elections. All of these factors are drawing money into the market. As of Wednesday, gold ETF holdings had reached 3,234.6 tonnes, compared with 655.6 tonnes of inflows this year. According to Bloomberg News, this has exceeded that of the whole year of 2009 during the last financial crisis. The continued rise in gold prices has coincided with a surge in the share prices of major gold producers.
Newmont and Barrick are up 44.37% and 48.41%, respectively, this year, far outperforming the S&P 500.
Some of the key support factors mentioned above are expected to remain in place in the short term, so many analysts interviewed by CNBC believe the bull market in gold may just have begun and could well set new records.
managing director of FX strategy at BK Asset Management.
"Ultimately I think what's happening is the market is taking implicit bets that inflation is starting to pick itself back up, and I think there's a really good reason why the market thinks so."
Galaxy Digital founder, CEO and chairman
"The Federal Reserve and central banks around the world just keep printing money – more money, more money, more money. We are in the irrational exuberant zone on the markets, but it is hard to figure out where that stops,"
On June 19, Goldman Sachs has raised its gold price expectations, and it is expected to exceed US$2,000 per ounce in the next 12 months, and analysts interviewed by CNBC (Michael Howell, CEO of Crossborder Capita) even predicted that in the next 18 months, the price of gold is expected to rise to 2500 US dollars / ounce, which means that there is still about 50% room for increase. In Thursday's trading, we saw a slight pullback in both spot and futures prices, mainly due to the strength of the dollar, but also some believe that gold may be overbought, leading some investors to take profits from recent gains.
Overall, if the gold price can break $1800, then we will see further increase in its price, if can't, then may pullback, we will keep an eye on this issue.