In October, in the context of rising risk aversion in the international market, gold and the US dollar have continued to rise for the same month. The negative correlation between the two has been significantly enhanced in the near future. Who will eventually bow down and what factors need to be paid attention to in the future. This article will do a simple analysis.
The three major logics of gold's slight increase in October
The bottom of the market is looming, and the key technology points are closed.
The premise of the slight increase in gold in October is that the previous monthly line has received six consecutive yin, which is the first time in nearly 30 years. At the time, the market was extremely pessimistic about the trend of gold. As of October 9th, the CFTC position data showed that speculators held gold futures and options net short positions rose to the highest level since 2006.
However, the big market quietly came when investor confidence almost collapsed. On October 11th, the nearly 30-yuan Changyang line broke the narrow range of 1190-1200 for nearly a month and a half.As a result of the set technical stop-loss points, collective passive liquidation leads to gold, such as the dislocation of wild horses, which is essentially a long-suppressed emotional catharsis.
(Spot gold broke through the one-and-a-half-month drop channel at that time)
Of course, from the perspective of valuation alone, gold also has an advantage at that time. According to quantitative statistics, when the ratio of gold to silver is over 80, it is an excellent opportunity to buy gold. This happened in 2003, 2009 and the end of 2015 to the beginning of 2016.
As of October 8th, the data shows that the ratio of gold to silver has reached 83. From the Standard & Poor's index, gold stocks are the cheapest in 20 years. Since the beginning of 2017, central banks in 16 different countries have increased their gold reserves. The 148.4 tons bought in the third quarter of this year are the most since 2015.
Even central banks in Poland and Hungary are bargain-hunting gold.This is the first time that EU countries have increased their gold reserves in this century.Therefore, the current price of gold has certain attractiveness. Once the downward trend is broken, it will stimulate the enthusiasm of the market.
The Federal Reserve has a vacuum period
Gold is an interest-free asset, and the opportunity cost is the actualinterest rate(and nominalinterest rateLess inflation). As the world's largest reserve currency, the US dollar is unshakable, and even if the Bretton Woods system collapses, the two are still closely related. If the Fed follows a gradual rate hike policy, then the attractiveness of dollar assets will increase, which will inevitably reduce the speculative demand for gold.
As the September rate hike map shows that, based on the four interest rate hikes this year, it is still possible to raise interest rates three times next year (the map in June is twice). The strong US economy has caused the market to worry that interest rates may temporarily exceed the neutral interest rate range.However, because of this, overdraft of the imagination of the market.
In addition, even if the December rate hike is nailed,There is a three-month vacuum period, so the rebound in early October is beneficial to the main funds..
US stocks plummeted over the Italian budget issue black swan
In October, the US Nasdaq plunged nearly 10%, the largest monthly decline since 2008, and entered the technical adjustment area.
For a long time, the US stock market has been short-lived. Even though the Trump tax reform policy has been blessed, US stocks have risen by about 80% since 2016, and high-level shocks are inevitable. Some of the funds in the stock market are diverted and flow into the precious metals market, forming a diversified investment and avoiding risks.
In addition, Italy’s budget deficit budget was far above the EU’s expectations, which was unexpected.
Therefore, if the market outlook still expects gold to appear independent, the following situations must occur, such asGlobal stock marketThe second round of plunge, the Italian budget deficit problem escalated into the euro zone split, the VIX panic index continued to soar.
According to the author's ignorance, the possibility of these three situations is not high. Take US stocks as an example. In the past 15 years, there was a stock market crash in China. At that time, the US stocks also showed a technical adjustment of nearly 20%. At that time, the author once thought that it might form a circular arc, but in fact the upward trend is not easy to say. Later, the US stocks are in this position. It is still doubling, so individuals are more inclined to use this as a normal adjustment, and a new high may still occur after the sideways.
As for the European problem, Italy is unlikely to switch from the euro zone to the local currency. Unlike the UK, the two sides may end up with a compromise solution, so this may also be a dud.
The VIX panic index has soared in early February and March of this year, but it has not lasted for a long time. Risk aversion often comes and goes, so it can't support long-term support for gold.
There is downward pressure on short-term gold
Although the Fed has raised interest rates three times this year, the salary data shows that US inflation has begun to accelerate. The latest non-agricultural data hourly wage growth has jumped. There will be a Fed rate decision in the early morning of this week. Although there is no interest rate hike and economic expectations, it is expected to maintain the hawkish wording seen in the recent policy statement.
Guotai JunanAnalystthink,US economic dataGood is the main reason for pressure on gold prices, and the brilliant economic data makes the attractiveness of the US dollar lead to the influx of funds. EuropeGDPThe data slowed to the lowest level in four years, further highlighting the strength of the US economy and thus putting pressure on gold prices.
However, the US economic data is not invulnerable. There are signs that the stimulus effect of the Trump administration's $1.5 trillion tax cut has peaked, interest rates have risen, and the decline in household wealth after the US stock market crash has also cast a shadow over spending.
(Article source: Huitong.com)