- 2018-10-19
Gold price and panic index fly together
The world will experience an "eventful summer", and Trump’s policy uncertainty remains high, making it impossible to remove the bred market risks. On the other hand, there are frequent geopolitical crises in the Middle East and the peninsula, entering the second quarter, including The risks of political disputes in Europe, including the French election, are getting closer, and risk aversion is rapidly heating up. Once a "black swan" event occurs, global investors may increase their gold holdings to tide over the crisis. Data show that as of April 14, CME Group's COMEX gold futures price was quoted at US$1,290.1 per ounce, a cumulative increase of nearly 12% since the beginning of this year.
The probability of occurrence of "black swan" event in the second quarter is high
According to the VIX index in the first quarter, the "black swans" of the global financial market seem to have all flown away. However, with the arrival of the second quarter, Europe will officially enter the "eventful summer". The political risks accumulated in the previous period may still not be removed in the second quarter. Therefore, once there is an "unexpected" event, it may even be a "black swan". The event may further aggravate financial market volatility and trigger a huge shock in the precious metals market.
Analysts said that the uncertainty of the European political situation is destined to become the focus of the market in the second quarter. Before the dust settles in the general elections in various countries, these changes in the political situation may boost risk aversion in the short to medium term, thereby benefiting the precious metals market.
On March 9, 2017, the United Kingdom officially announced the commencement of the Brexit procedure as scheduled, which means that the United Kingdom has made relatively positive progress in Brexit. The current political risks in the UK have declined, but for Brexit, the future is still full of challenges.
International Trade Futures analysts predict that in the end, in order to avoid a precipitous Brexit, there is a greater probability that the United Kingdom and the European Union will make concessions to achieve Brexit. Although the start of the Brexit procedure means that the Brexit process will go further, the road to Brexit is still full of difficulties. During the period, the negotiation and game between the British government and various forces may still aggravate market volatility.
Entering the second quarter, the French general election will be the biggest risk event facing the European political situation, because its electoral agenda runs through the entire second quarter; there will be two rounds of presidential elections on April 23 and May 7, respectively, and June 11 and 18. Parliamentary elections.
In this regard, industry insiders said that as Europe entered an "eventful summer" in the second quarter, it would be difficult for the European Central Bank and the Bank of England to make big moves in the context of political tensions, and the probability of continuing to stand still has increased.
In addition, for Trump, although the current logic of "Trump's policy landing-affecting the economy-affecting the pace of the Fed's interest rate hike-affecting the trend of the dollar" is temporarily low, the possibility of Trump's policy uncertainty needs to be realized. Continue to pay attention, especially the market has greater doubts about the possibility of the fiscal policy being implemented and implemented as scheduled.
Investors increase their gold holdings in panic
Investor trading in "safe havens" such as gold and yen is becoming popular.
It can be seen that the Fed will be more determined to raise interest rates this year: Since the Fed further raised interest rates in December 2016 and said that the Fed will raise interest rates three times in 2017, entering 2017, the Fed's rate hikes will be significantly faster than in 2106. Speeding up, especially the interest rate hike in March this time also further reflects that the Fed is gradually returning to the normal path of interest rate hikes, and the flexibility to take actions in the future is also further improved.
In fact, the Fed's February interest rate meeting did not give any hints on future interest rate hikes. However, in less than two weeks from the end of February to early March, the market was completely reversed due to the hawkish voices of Fed officials. A pre-judgment of the interest rate hike in March. This shows that the Fed's expected management approach is gradually changing from the statement of the previous interest rate meeting to official speech. Such a change will greatly shorten the "warm-up period" for the Fed to raise interest rates, and the release of interest rate signals through official remarks will also make the Fed more flexible, and the Fed's subsequent interest rate hike path will also be more difficult to predict.
But in any case, the current Fed officials continue to speak out about interest rate hikes and the discussion of "reducing balance sheet" is heating up. The above-mentioned people pointed out that under the current situation that the US economy has embarked on a stable recovery track, the Fed is likely to enter a stable interest rate hike cycle. The Fed will be more determined in its interest rate hike actions this year, which will invisibly give the US dollar a certain amount. support. However, given the current economic fundamentals in the United States and the uncertainty of Trump’s policies, after the Fed raised interest rates in March, the urgency for further interest rate increases does not seem to be strong. Although the Fed is expected to raise interest rates twice during the year, the June rate hike is still uncertain.
Despite this, the central bank and investors still have expectations for the gold market. Data shows that although global central banks have made net purchases of gold for 24 consecutive quarters, the global central bank's gold purchases in the fourth quarter of 2016 were 114.4 tons, an increase of 32.7 tons from the previous quarter, mainly due to Trump's election as President of the United States in the fourth quarter of 2016. Related political risk events have boosted the central bank's demand for gold purchases.
According to industry insiders, because core inflation is still moderate, and high oil prices may not continue, the momentum for continued sharp rise in U.S. inflation may not be sufficient. It is still difficult to determine whether the superimposed Trump policy will be implemented on schedule. It is highly doubted by the market. Therefore, the US dollar has limited room for further upside. On the whole, maintaining the US dollar index in the second quarter will still fluctuate at a high level near 100 points, which will cause the gold price to fluctuate, and the long-short game will coexist. Investors are advised to pay close attention to the trend of Trump’s policy and the probability of the Fed’s rate hike in June. Both will have a certain impact on the future trend of the US dollar and thus affect the precious metals market.