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Guo Xiejun, reporter of China Fund News.

After hitting record highs in a row, gold prices experienced a brief correction in late April and recently regained their upward trend. What is the underlying logic behind the rise in gold prices? Will the rise in gold prices continue? In this regard, a reporter from China Fund Daily interviewed a number of representatives of Chinese and foreign institutions.

Gold remonetization

Guan Tao, global chief economist at Bank of China Securities, pointed out that the rise in gold prices is just a wave of make-up gains. In 2020, the world launched an unprecedented collective "release of water" by central banks. During this period, Bitcoin has soared from more than $6000 in 2020 to $60, 000 to $70, 000 now. During this period, the price of gold fluctuated in a narrow range of $1600 to $1800 an ounce for most of the time and did not rise until the end of 2022, breaking through $2400 an ounce for the first time this year. Some experts once said at an international conference that if in the era of the gold standard, the consequence of QE (Quantitative Easing, quantitative easing) must be the depreciation of major currencies.

Guan Tao pointed out that in the early 1970s, the Bretton Woods system of "double pegging" disintegrated, in which the US dollar was decoupled from gold, so that gold was demonetized, and the international monetary system entered the credit standard era. However, since the 2008 financial crisis, there has been a round of currency overissuance in the major international currency issuers, resulting in a flood of global liquidity. The introduction or withdrawal of the extraordinary monetary policy of the relevant central banks will have a negative spillover effect on other countries and regions of the world, further highlighting the dilemma of the New Triffin problem. In addition, the abuse of economic and financial sanctions by major international currency issuing countries in recent years has further shaken the credit foundation of the current international monetary system and accelerated the development trend of multipolarization of the international monetary system. All these will provide medium-and long-term support for the trend revaluation of gold.

Hong Hao, chief economist of Sirui Group, has a similar view to Guan Tao. "Why does the dollar index continue to rise while the price of gold in dollar terms is also rising?" he said. Because outside the paper money system, a new monetary system is emerging-gold and cryptocurrencies, and even a variety of commodities. We should look at this brand-new era with new thinking. "

The risk aversion property of gold is highlighted.

Wang Yi, chief economist of Great Wall Securities, pointed out that after the global epidemic, the restructuring of the global value chain has not only accelerated the escalation of geopolitical risks and the intensification of international competitive interaction, but also contributed to the growth of global uncertainty. This process of change has also led to more currencies playing a settlement role in the cross-border trade payment system, resulting in a corresponding decline in the proportion of the US dollar in global foreign exchange reserves, and the safe-haven nature of gold has become more and more prominent.

Liu Jia, head of Asian investment strategy at Deutsche Bank's international private banking division, believes that the rise in gold prices has benefited from an increase in the share of gold in foreign exchange reserves by some central banks and increased consumer demand for gold in China and India. The recent escalation of geopolitical risks in the Middle East has also increased the safe-haven demand for gold.

The rally in gold is far from over.

So, how do institutions judge the medium-and long-term trend of gold prices?

Hong Hao believes that although the rise will not be plain sailing, the rising trend of gold is far from over.

"We are still optimistic about the performance of gold in the next 12 months," Liu said. We believe that if the Fed starts to cut interest rates in the second half of the year, the relative attractiveness of gold will further increase. "

Wang Yi predicts that safe-haven demand and the central bank's continued gold purchases will continue to provide strong support for gold prices. In the near future, gold may have some pullback pressure due to the departure of gold bulls, but there is still room to rise from a medium-and long-term perspective.

Wang Xinjie, chief investment strategist at Standard Chartered's China Wealth Management division, said that given that real interest rates will fall in the future, central bank demand will continue to grow, and futures strategies such as CTA (Commodity Trading Advisor, futures trading adviser) may continue to support gold prices. Standard Chartered raised its 12-month target for gold to $2350 an ounce.

Editor: captain

Audit: Xu Wen