Gold Hits New High Amid Global Liquidity Easing and Bullish Sentiment

Overnight, COMEX gold hit a new high again, closing at $2,763.1 per ounce, up 0.88%. Early morning on October 23rd Beijing time, spot gold also set a new record at $2,749 per ounce.

Boosted by this, SHFE gold strengthened in the morning, leading the gold ETF fund (159937) to gap higher, touching a historical high of 6.037 yuan before slightly retreating, up about 0.1% as of 9:37. Wind data shows that since October 16th, the product has been funded for four consecutive trading days, with the latest product share at 2.415 billion, and the fund size has also reached a new high of 14.514 billion yuan.

In terms of news, last week the European Central Bank cut interest rates for the third time this year, and the market is currently betting that the Federal Reserve will cut rates by 25 basis points in November. The global entry into a low-interest-rate environment is beneficial to gold, a non-interest-bearing asset. Moreover, analysts point out that after the Federal Reserve turned to a loose monetary policy, it has increased the attractiveness of gold to Western investors.

According to the CME "FedWatch", the probability of the Federal Reserve cutting by 25 basis points in November is 91.1%, and the probability of maintaining the current interest rate is 8.9%. The probability of maintaining the current interest rate in December is 2.2%, the cumulative probability of cutting by 25 basis points is 29.5%, and the cumulative probability of cutting by 50 basis points is 68.3%.

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Citi Research said in a report this week that it has raised its three-month forecast for gold prices from the previous $2,700 per ounce to $2,800, adding that its six to twelve-month forecast is $3,000 per ounce. Citi pointed out that the potential further deterioration of the U.S. labor market, Federal Reserve rate cuts, and physical and ETF buying are the main driving factors. Despite the weakening of China's retail physical demand and the rise in U.S. interest rates, gold and silver have performed very well since the Federal Reserve cut rates by 50 basis points last month and non-farm employment data exceeded expectations.

What about the future gold price? CITIC Construction Investment believes: 1. From a short-term perspective, the gold price space is closely related to safe-haven sentiment. In terms of timing, the U.S. election results in November may be a window period for the market to bet on geopolitics. 2. From a medium to long-term perspective, the gold price center may have shifted upwards, and this trend is worth paying attention to. The global economic growth pattern and the reshaping of the supply chain, the upward shift of the inflation center, will have a long-term impact on gold pricing.

Data shows that the gold ETF fund (159937) tracks the performance of the renminbi gold price by investing in gold spot contracts on the Shanghai Gold Exchange. Retail investors without a stock account can also layout gold investment opportunities through the off-exchange linked fund (Class A: 002610; Class C: 002611) with one click.