1. Market risk aversion is heating up, pushing up the price of gold.
Following the bankruptcy of Silicon Valley Bank in the United States, Credit Suisse, another big bank in Europe and America, is also on the verge of bankruptcy. Fortunately, on March 20, 2023, Switzerland announced that UBS had acquired Credit Suisse for 3 billion Swiss francs, which solved the urgent need of Credit Suisse. However, due to the conditional acquisition, Credit Suisse Bank still obtained additional Tier 1 capital bonds worth about 654.38+0.6 billion Swiss francs and about 654.38+0.72 billion US dollars. This triggered market investors to re-examine the risks in the financial market, and the risk aversion continued to rise, and a large number of safe-haven assets were bought, which led to the further push up of gold prices.
The market is safe and the price of gold is soaring.
Prosperous collections, troubled gold and bank risks in Europe and America make investors extremely cautious, so they may continue to be the booster of high gold prices in the future.
2. The slowdown in the US dollar interest rate hike led to an increase in the price of gold.
Last Friday night, the data released by the United States in February, such as industrial output speed and consumer confidence index, fell short of expectations. The Fed stopped raising interest rates aggressively, and the whole world is betting that the process of raising interest rates by the Fed may slow down. The expectation that the Fed's interest rate hike will slow down and the interest rate cut cycle will restart will be pushed up, which will also benefit the gold price.
The market bet that the Fed will adopt short-term loose monetary policy to deal with sudden crisis. For example, the recent re-expansion of the Federal Reserve's balance sheet has also led to a significant downward shift in interest rates, which has also played a significant positive role in precious metals. However, it should be noted that although the recent risk aversion has brought a strong upward impulse to the price of gold, and since the price of gold is now close to the valuation high point, the possibility of breaking through the historical high point again is not high, and the persistence of the price increase still needs the support of the Fed's monetary policy shift.
The rate of US dollar interest rate hike slows down.
3. Political risks
Escalating geopolitical risks around the world, such as the Russian-Ukrainian war that has lasted for a year and the tension between North Korea and South Korea, may cause panic in the market, thus prompting investors to invest their money in safe-haven assets. Gold is the most convenient safe-haven asset, and it belongs to hard currency and can stand the test of history.
Political risks, such as the Russian-Ukrainian war.
To sum up, three possible factors are the main reasons for the soaring gold price to $2,000, but it should be noted that the reasons for the rising gold price are usually complicated, and its fluctuation is affected by many factors, so the past performance cannot predict the future trend. Investors should make full research and analysis before making any decision.
Then, as an investor, what can be done more safely and reasonably after the price of gold has soared to $2,000?
1. Not too high.
As we all know, whether the Fed market will raise interest rates this time is not only related to the fight against inflation itself, but also a psychological game with the market to some extent. In other words, if the banking crisis gradually subsides, the Fed has confidence in the banking system and the market reaction is not so strong, then the Fed is likely to stick to austerity and raise interest rates as scheduled, just like the European Central Bank. At that time, precious metals will give up their gains and usher in a wave of decline, and gold will naturally fall. Therefore, according to your own situation, don't chase after gold.
Don't chase after gold.
If more risk events occur in the future, which will lead the Fed to make a tentative decision to raise interest rates, it will also imply to some extent that the Fed is worried about the risks of the current US financial system, which will most likely further push up the price of noble metals. By then, the price of gold may rise further. Therefore, if you have enough risk tolerance, you can also allocate a small amount of gold, and appropriately increase or decrease positions or even clear positions according to the development of the situation.
2. Allocate investment products linked to gold
If we are optimistic about the possibility of follow-up gold, and because gold is still an asset allocation variety, we can invest in some investment products linked to gold. There is a certain probability that the price of gold will remain at a historical high in the future, so there will still be investment opportunities.
Gold bullion related to gold investment products
In a word, the factors of gold price rising are comprehensive, so investors must understand the reasons for the fluctuation, and don't blindly chase after or sell off to avoid losses.