Gold Rise: Central Banks, Public Demand, Instability.
Recently, the international gold price has been soaring relentlessly. After breaking through the $2000 mark a few days ago and experiencing a slight adjustment, it is now once again approaching the $2000 threshold.
In the meantime, as the People's Bank of China continues to sell off U.S. Treasury bonds, it has been increasing its gold holdings for four consecutive months.
After decoupling from gold, the U.S. dollar has achieved the status of the world's currency, but now, with the re-establishment of gold's position, the dollar seems to be on the decline.
Now, even the enthusiasm of ordinary people to buy gold has been ignited. What will the future trend of gold prices be like?
01. Gold Buying Frenzy
Recently, many gold shops have seen a large number of middle-aged women coming to buy gold in bulk, keeping the staff extremely busy.
In the current situation, the investment market for gold is experiencing an unprecedented surge in enthusiasm, and the business of physical gold-selling stores is also very good, with a constant stream of consumers.
Under this trend, the price of gold has risen rapidly, and offline consumption has skyrocketed.
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Following the recent exposure of the U.S. Silicon Valley Bank incident, the aftermath has led to a demand for risk aversion among the public, which has also driven a significant increase in gold prices.
Not long ago, the international price of gold fell repeatedly, reaching a low point of $1600 per ounce, but it was unexpected that a noticeable increase would follow, especially after a series of U.S. bank bankruptcies. A few days ago, the gold price per ounce even exceeded $2000, with an increase of more than 20%.02, Gold Shops Thrive
The rapidly rising gold prices have fueled the public's enthusiasm for buying gold.
Nowadays, the offline gold market is booming, with many customers coming to inquire and purchase. Sales staff in the stores indicate that the price of gold has seen a significant increase in a short period, and they are especially busy on weekends.
Most of the customers buying gold offline are middle-aged and elderly women, who mostly purchase gold jewelry with auspicious meanings. They also express that they buy these items for the good fortune they symbolize.
Although they acknowledge that the current gold prices are too high, they also state that the interest rates from banks for cash deposits are too low. Therefore, they prefer to buy gold, which can be passed down to future generations, adding more value.
Regarding the rapid increase in gold prices, market insiders offer an explanation. They first believe that this is the market releasing the long-accumulated gold inventory after the pandemic. Secondly, they mention that the trend towards high-end consumption is strong, with customers having a particularly high demand for high-quality crafts, artworks, and gold jewelry.
Lastly, they attribute the increase to the impact of the US bank bankruptcy incident, which has made the international market extremely unstable, causing significant fluctuations. This has led to an increased demand for value preservation and risk aversion among people, which in turn has driven market consumption.
03, Central Banks Buy Gold
However, some economic experts suggest that investors should pay long-term attention to the gold market and choose their entry timing carefully.
Currently, central banks around the world are hoarding gold, and the People's Bank of China has also significantly increased its gold holdings over the past four months.Based on the data released by the aforementioned countries, our country's gold reserves were 102.8 billion USD in October last year, and by the end of February this year, the gold reserves had reached 120.2 billion USD, an increase of 17.4 billion USD, which is equivalent to 120 billion RMB.
However, due to the constant fluctuation in the price of gold, the above-mentioned changes in the value of gold holdings do not fully reflect the changes in the quantity of gold held by our country.
Only by calculating the weight of the gold held in ounces or tons can the actual situation be better reflected. Nevertheless, it is an undeniable fact that our central bank has increased its gold holdings for four consecutive months.
This is actually the result of the long-term demand for de-dollarization in the international community.
It can be imagined that the status of the US dollar will gradually decline in the future.
04, A small reminder
In response to the current enthusiasm for gold buying, some experts have indicated that it is acceptable for customers in the offline gold market to purchase gold jewelry for the sole purpose of wearing or giving to others, but not for the purpose of preserving value through investment in jewelry.
Another expert mentioned that the surge in gold prices is due to short-term reasons and should not be blindly invested in.
He believes that this phenomenon is a momentary reaction with low stability, and investment should be cautious. There will be further adjustments in the short term, and the risk of entering the market now is too high. It is recommended to make decisions after the market direction stabilizes in the later period.
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