What is the future of gold prices in the first half of the year?

Since this year, the international gold price has performed well, especially in the last two months. This has led to a strong rise in the price of gold assets in the mainland market, which has aroused widespread concern among investors.

On Friday, the main contract of gold futures on the New York Mercantile Exchange rose 0.44% to $1,403 an ounce, above $1,400 for the first time in six years. Since the end of May, international gold prices have risen from about $1,280 an ounce to nearly 10% for the whole year. At the same time, the price of gold assets in the Chinese market has been rising steadily. As of the closing day of the 24th, the main contracts of gold futures on the Shanghai Futures Exchange had risen again, reaching 315.8 yuan per gram (RMB, the same below), with an increase of 26 yuan per gram in the past month; spot gold on the Shanghai Gold Exchange had also risen by about 0.7% on the same day, reaching a six-year high; on the stock market, the gold sector rose by more than 1% on the same day, with a cumulative increase of more than 16% this month, showing a marked run-up. Win the market. On the fund side, gold ETF (market trading fund) in the mainland market has performed well in recent years, including Cathay Pacific, Huaan and Yifangda gold ETF set the highest net value record since its establishment on June 20. In response to the strong rise in gold, Xu Ying, a futures analyst at the Eastern Securities Exchange, told China News Agency that this was mainly due to the warming expectations of easing by central banks in Europe and the United States, especially the recent position of the Federal Reserve, and the unsatisfactory latest US economic data. The market expects the Federal Reserve to start a rate-cutting cycle.

Recently, the Federal Reserve announced that it would keep the target rate of the Federal Fund unchanged. In its statement today, the Federal Reserve deleted the previously neutral phrase "be patient" and replaced it with a more rate-cutting phrase "take appropriate action" to maintain economic expansion. It is widely believed that the Federal Reserve is expected to start a new cycle of interest rate cuts. At the same time, poor U.S. economic data may accelerate the arrival of the interest rate reduction cycle. According to media reports, IHS Markit recently released data showing that in June this year, the initial value of the PMI (Purchasing Manager Index) of American manufacturing industry fell to 50.1, which is not only lower than the market expected value of 50.4, but also lower than the final value of 50.5 in May. After May, it hit a new low since September 2009, approaching the 50-front line of the divide between prosperity and decline. Han Miao, chief analyst of Xiamen Gold Investment Co., Ltd.

Under the influence of this factor, the dollar index began to fall, and gold prices were negatively correlated with the dollar index for most of the time. In addition, the global economic uncertainty is still large, which promotes the inflow of funds into the gold market with dual attributes of investment and hedging value. Recently, the International Monetary Fund and the World Bank have lowered their global economic expectations. Zhang Ming, chief economist of Ping An Securities, said that if global trade liberalization encounters general setbacks in the future, many countries will generally face pressure from rising prices of raw materials and intermediaries, which will also bring new stagflation risks to the global economy. This year's global growth is probably the worst in the three years from 2017 to 2019. It is worth mentioning that global central banks have recently bought a lot of gold. According to the World Gold Association, central banks bought 145.5 tons of gold in the first quarter of 2019, up 68% from the same period in 2018.

In view of the trend of gold prices in the future, Han Xiao believes that the unilateral gold market in the past decade has basically followed the expectations of the Federal Reserve's monetary policy. This round of gold market may be at the beginning of the rising cycle, especially considering that the U.S. economy may weaken in the second half of the year. The side effects of last year's stimulus tax reform may begin to appear in the second half of the year. With falling inflation data, the Fed will cut interest rates more likely in the second half of the year. In this expectation, gold prices may come out of the unilateral rise. Some organizations hold similar views. In a report issued by CICC, the Federal Reserve is expected to cut interest rates in the second half of the year and usher in an easing cycle of global monetary policy. In the second half of the year, the downside risks of the global economy increase, while uncertainties such as global trade frictions, Italian finance, Britain's demise from Europe, Middle East geopolitics and other factors increase. Gold allocation value will be highlighted, and good investment returns are expected to be achieved.

Other analysts hold a relatively cautious view. Zhang Wei, an information analyst at Zhuochuang, believes that the current factors are undoubtedly conducive to supporting gold prices. However, due to excessive speculation by institutions in the early period, and if the future economic and trade negotiations among countries make great progress, global risk sentiment will ease, and the prices of risky assets such as stock markets are expected to recover, which does not exclude the possibility that gold prices will face short-term callback pressure.