Xinhua News Agency, Shanghai, December 31 (Reporter Chen Yunfu) continued to downturn, the gold market at the end of the year. In December 2018, international gold prices rose by more than 4%, refreshing the biggest monthly increase in the past two years. Many institutions expect that gold prices will continue to rise in 2019 with the increase of demand for hedging, but it may be too early.
In December 2018, the gold market entered the "sprint mode" at the end of the year, accelerating the narrowing of the market decline this year. International gold prices not only stabilized the high in the second half of the year, but also continued to rise to the level before the mid-year decline.
So far, gold prices in New York have returned to the vicinity of $1280 an ounce, up about 4.3% from the beginning of the month, the biggest monthly increase since February 2017. Gold futures denominated in Renminbi have risen more than 3% over the same period, closing at 287.85 yuan per gram, a new high in more than two years.
Institutional analysis shows that gold prices rose at the end of the year, still benefiting more from the volatility of the dollar. "For most of 2018, the combination of multiple factors led to the rise of the dollar, and the strong performance of the dollar depressed the price of gold. In response, Ji Ming, chief analyst of Shandong Gold, said that affected, international gold prices once fell below the $1200 threshold in the second half of the year.
In December 2018, after sustained strength, the dollar index, which measures the strength of the dollar against other currencies, fell 0.8% from the previous month, the first monthly decline in the past eight months. The temporary downturn of the dollar gave the gold market a chance to "recover lost ground".
With the recovery of gold prices, market expectations for future bullish market are also rising. Data released by the Commodity Futures Trading Commission show that by late December, speculators'net long positions in gold continued to increase, indicating an increase in market sentiment.
Meanwhile, the position of gold ETF fund, which measures the change of market hedging sentiment, has gradually recovered. The holding data of SPDR, the world's largest gold ETF fund, show that by December 28, 2018, the gold held by SPDR will return to 787.7 tons, an increase of nearly 60 tons compared with its stage low in early October.
"The consensus expectation is that in 2019, as the effect of the tax reform in the United States weakens, the U.S. economy may push the dollar weaker, thereby boosting gold." Ji Ming said that although market expectations for the gold market in 2019 may be too optimistic, the general trend of market expectations in the future is still strong.
In Ji Ming's view, gold prices may continue to oscillate in 2019, and there are no conditions for bulls. However, in the next few years, as the monetary environment brought about by the economic downturn is relaxed again and investors'demand for hedge is superimposed, it is still probable that gold prices will rise to $1400 or higher.
It is worth noting that in 2018, China, the largest gold producer and consumer in the world, continued to show strong performance in gold prices denominated in Renminbi. The price of gold futures in Shanghai rose by about 3.6% compared with the previous year, which is not only different from the slight decline in the international market in the same period, but also the largest annual increase in two years.
"For investors, this means that if they buy products linked to international gold prices, they may lose slightly in 2018, while if they buy products denominated in Renminbi, they will still have a positive return in 2018." Wang Chao, a senior gold market investor, said.
In this regard, experts pointed out that in the future gold price may strengthen the environment, investors also need to pay attention to the selection of appropriate investment tools. "Institutional investors participate in the gold market more for the purpose of asset allocation. They use the advantage that gold will not change prices in different directions compared with other assets to stabilize the return of the portfolio." Jiang Shu, a gold market expert, said that the channels and purposes of individual investors'participation are different, including gold bars, gold futures, gold spot postponement and so on. Investors need to choose appropriate investment channels and timing according to their investment objectives, capital volume and risk tolerance.
