Gold Rally Hits New Highs: Can You Still Get In?

Gold spot and futures prices have been soaring recently, reaching new highs.

As of October 22nd, before the deadline for submission, the London gold spot price rose by nearly 1%, firmly standing above the $2730 per ounce mark. In terms of futures, COMEX gold also continued its upward trend, slightly increasing by 0.38%,报价 at $2749.2 per ounce.

Gold-related thematic ETFs have also been warmly embraced by capital, showing strong gold absorption capabilities. Data from Wind shows that as of the 22nd, a total of 20 gold-themed ETFs in the entire market have seen a combined net inflow of funds of 20.61 billion yuan for the year. Looking at the return period, among the 20 gold-themed ETFs in the entire market, a total of 16 funds have achieved a return of more than 35% for the year.

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People interviewed said that gold is a long-term investment asset, but the continuous innovation of gold prices has also increased the risk of chasing the rise. It is recommended that investors can adopt a step-by-step purchase method to diversify price risks.

Gold prices are soaring

This year, gold prices have been continuously rising and setting records.

As of October 22nd, before the deadline for submission, the London gold spot price rose by more than 0.5%, firmly standing above the $2730 per ounce mark. In terms of futures, COMEX gold also continued its upward trend, slightly increasing by 0.38%,报价 at $2749.2 per ounce.

Domestically, the Shanghai Gold Exchange's gold T+D day trading closed up by 0.48%,报价 at 624.78 yuan per gram. The Shanghai Futures Exchange's gold futures main contract 2412 closed at 626.5 yuan, up 0.7%, with a trading volume of 254,300 hands and a position of 187,400 hands.

The "crazy" gold price has also triggered a continuous "gold rush", and the popularity of fund products linked to gold has also reached an unprecedented level. The reporter noticed that under the situation of the gold price surge, gold-related thematic ETFs have been warmly pursued by capital, showing strong gold absorption capabilities.Wind data shows that as of October 22, a total of 20 gold-themed ETFs in the entire market have seen a combined net inflow of funds reaching 20.61 billion yuan for the year. Among them, Huan Asset Gold ETF has the largest inflow, amounting to 6.495 billion yuan. In addition, the net inflow for the year for ETFs such as E Fund Gold ETF, Bosera Gold ETF, and Guotai Gold ETF all exceed 3 billion yuan.

The profitability of gold-related thematic ETFs is also not to be underestimated. According to Wind data, the Huaxia China Securities Shanghai and Hong Kong Gold Industry Stock ETF has an interval return of up to 46.87% for the year. In addition, 15 ETFs including E Fund Gold ETF and Guotai Gold ETF have an interval return of over 35% for the year.

Behind the Logic

Data shows that since 2024, the cumulative increase in London gold spot has been nearly 40%.

Why can the gold price, which has been at a high level for a long time, continue to soar?

People interviewed generally believe that the continuous record high of international gold prices is influenced by the resonance of various favorable factors.

Firstly, the intensification of global geopolitical risks. Wang Weimang, an investment manager at Zhonghui Futures Asset Management Department, analyzed to reporters that the main reason for the recent surge in gold prices lies in the fact that before the US election, geopolitical issues such as the Korean Peninsula issue are changeable, the Middle East issue is also recurring, and the Russia-Ukraine situation continues to disturb. With the outbreak of multiple geopolitical issues, Trump's support rate has risen, and Trump's current advocacy for increasing tariffs and expelling illegal immigrants will all increase uncertainty.

Secondly, gold has traditional monetary attributes. Xia Yingying, the director of Nanhua Futures Nonferrous Department, pointed out that from a long-term perspective, the current credit monetary system dominated by the US dollar has declined in credibility, boosting the demand for gold's traditional monetary attributes, which also includes gold's function as a hard currency to resist inflation.

Thirdly, the expectation of the Federal Reserve's interest rate cut has heated up. Xia Yingying said that from a medium-term perspective, the Federal Reserve is still in the initial stage of the interest rate cut cycle since it started cutting interest rates in September, and the demand for gold investment, which is sensitive to interest rates, is still in a growth cycle, which is also pushing up the center of gravity of gold prices.

Kang Daozhi, chairman of Daozhi Investment, also pointed out that with the arrival of the interest rate cut cycle led by the United States, the loose policies of central banks in various countries will also lead to currency devaluation and price increases. The role of gold in preserving and appreciating value in an inflationary environment increases its demand and drives up prices.Four is the strong demand for gold purchases by central banks. Wang Weimang told reporters that according to a report by the World Gold Council, global central banks net purchased 483 tons of gold in the first half of this year, breaking the record of 460 tons in the same period of 2023. Recently, officials from the central banks of Mexico, Mongolia, and the Czech Republic have also broken the convention of central banks not discussing gold.

In addition, Xia Fengguang, fund manager of Rongzhi Investment Fund, said to the reporter, "The gold price has been setting new highs all the way, partly due to emerging markets increasing their allocation of gold, and partly due to the heavy debt burden of the United States, which is also a reflection of the decline in the global currency reserve status of the US dollar."

How about the future market?

Can the gold price continue to rise all the way?

"Before the end of the US election, the short-term strength of precious metals may continue, and in the long term, it will also be the focus of the upward shift," Wang Weimang analyzed and said.

Specifically, Wang Weimang believes that there are several reasons: First, geopolitical issues add new uncertainties; Second, the world is in a macro interest rate reduction environment; Third, the world continues to expand its debt; Fourth, the US election stimulates the gold price; Fifth, the demand for gold purchases by global central banks continues.

For the future market, Xia Yingying also said that she will maintain a long-term bullish view. Looking at the fourth quarter, it is expected that gold still has further upward momentum, but the uncertainty of gold prices in 2025 may increase, mainly because there is still a large uncertainty in the way the US economy lands, which directly affects the next policy choices of the Federal Reserve.

Xia Yingying pointed out that according to the performance results of the US economy in the seven rounds of interest rate reduction cycles by the Federal Reserve since 1980, five times fell into a recession, and only two times achieved a soft landing. The recession path indicates that the Federal Reserve will accelerate interest rate cuts and even expand its balance sheet, and the gold price is expected to temporarily plummet when the panic of recession appears, but then usher in a big bull market; The soft landing path indicates that the Federal Reserve's monetary policy will be limited, which may lead to gold bearing the pressure of a certain degree of adjustment due to profit-taking by long positions in 2025.

Can we still get on the gold track now?

"Gold is a long-term investment asset, but under the current situation where gold continues to set new highs, the risk of chasing the rise is also increasing," Xia Yingying said, suggesting that investors can adopt a step-by-step purchase method to diversify price risks. In the fourth quarter, the overall adjustment strength of gold is expected to be limited, because the favorable factors driving the rise in this round of gold prices have not dissipated.Kang Daozhi stated that as the gold price continues to rise and hit new highs, the risks it contains are also increasing. The global economic environment is changeable, and any adverse factor can cause a short-term impact on the gold price, and profit-taking positions can also lead to increased price volatility. At the current high level, investors should not buy heavily, and it is advisable to participate with a light position.

Chen Bozhong, a partner at Zhong'an Shengdian Investment, believes that the gold price will continue to remain at a high level for some time until a symbolic event is expected to appear, changing the macroeconomic uncertainty in the world, and then a reversal will occur. For investors, the current holding investment in gold has a lower return-to-risk ratio than a few years ago. If investing in gold at present, it is recommended to focus on trading.