[Edit this paragraph] Factors affecting the price of gold
Before 1970s, the price of gold was basically determined by governments or central banks. Internationally, the price of gold will be relatively stable in the future, so it is no longer directly linked to the US dollar. The price of gold is gradually marketized, and the factors affecting the price of gold are increasing day by day. It can be divided into the following aspects: 1. Demand factor: the demand for gold is directly related to the use of gold. (1) The need for hedging. Gold reserves have always been regarded by the central bank as an important means to prevent domestic inflation and regulate the market. For ordinary investors, investing in gold is mainly for the purpose of preserving value under inflation. During the economic downturn, due to the insurance of gold relative to monetary assets, the demand for gold increased and the price of gold rose. For example, in the three dollar crises after World War II, due to the serious balance of payments deficit in the United States, the dollar held by various countries increased greatly, the market's confidence in the value of the dollar was shaken, and investors snapped up gold in large quantities, which directly led to the bankruptcy of the Bretton Woods system. The depreciation of 1987 dollars, the increase of the deficit in the United States and the instability in the Middle East also contributed to the sharp rise in international gold prices. (2) Changes in the actual demand for gold (jewelry industry, industry, etc. Generally speaking, the development speed of the world economy determines the total demand for gold. For example, in the field of microelectronics, gold is increasingly used as a protective layer; In the fields of medicine, building decoration and so on, although the progress of science and technology makes gold substitutes appear constantly, the demand for gold is still on the rise because of its special metal properties. In some areas, local factors have a great influence on the demand for gold. For example, due to the financial crisis, India and Southeast Asian countries, which have always had a great demand for gold jewelry, have greatly reduced their gold imports since 1997. According to the data of the World Gold Council, the demand for gold in Thailand, Indonesia, Malaysia and South Korea decreased by 7 1%, 28%, 10% and 9% respectively. (3) Speculative demand. According to the international and domestic situation, speculators use the fluctuation of gold price in the gold market and the trading system in the gold futures market to "short" or "replenish" gold in large quantities, artificially creating the illusion of gold demand. In the gold market, almost every plunge is related to hedge fund companies borrowing short-term gold to sell in the spot gold market and establishing a large number of short positions on the COMEX gold futures exchange. When the price of gold fell to a 20-year low of 1999 in July, the data released by the Commodity Futures Trading Commission (CFTC) showed that COMEX's speculative short position was close to 9 million ounces (nearly 300 tons). When a large number of stop-loss selling was triggered, the price of gold fell, and the fund company took the opportunity to make up the position and make a profit. When the gold price rebounded slightly, the hedging forward selling from manufacturers suppressed the further rise of the gold price, and at the same time gave the fund company a new opportunity to re-establish short positions, forming a downward pattern of the gold price at that time. 2. Supply factor: The central bank is the largest gold holder in the world. 1969 The official gold reserve was 36,458 tons, accounting for 42.6% of the total surface gold stock at that time. By 1998, the official gold reserve is about 34,000 tons, accounting for 24. 1% of the total mined gold stock. According to the current production capacity, this is equivalent to the world gold mineral output 13. Because the main use of gold has gradually changed from an important reserve asset to a metal raw material for jewelry production, either to improve the balance of payments or to curb the international gold price, the central bank's gold reserves have declined greatly in absolute and relative quantities in the past 30 years, and the decline in quantity mainly depends on the sale of gold reserves in the gold market. For example, the large-scale selling by the Bank of England, the Swiss National Bank and the International Monetary Fund to reduce gold reserves has become the main reason for the recent decline in gold prices in the international gold market. The supply factors mainly include: (1) the central bank's throwing money; (2) At present, there are about 1 374 tons of gold in the world, and the above-ground gold stock is still growing at a rate of about 2% every year. (3) Annual supply and demand The annual supply and demand of gold is about 4,200 tons, and the newly produced gold accounts for 62% of the annual supply. (4) New gold mining costs The average total cost of gold mining is slightly lower than $260 per ounce. Due to the development of mining technology, the cost of gold development has been declining in the past 20 years. (5) Political, military and economic changes in gold-producing countries. Any political and military turmoil in these countries will undoubtedly directly affect the country's gold production, and then affect the world's gold supply. 3. Other factors: (l) the impact of the exchange rate of the US dollar. The exchange rate of US dollar is also one of the important factors that affect the fluctuation of gold price. Generally, when the dollar in the gold market rises, the price of gold will fall; When the dollar fell, the price of gold rose. A strong dollar generally means that the domestic economic situation in the United States is good, domestic stocks and bonds in the United States will be sought after by investors, and the function of gold as a means of value storage will be weakened; The decline in the exchange rate of the US dollar is often related to inflation and the stock market downturn, and the value-preserving function of gold is once again reflected. This is because the depreciation of the dollar is often related to inflation, and the high value of gold will often stimulate the preservation of gold and the increase of speculative demand in the case of the depreciation of the dollar and the intensification of inflation. In August of 197 1 and February of 1973, the US government announced the depreciation of the US dollar twice. Influenced by the sharp drop in the exchange rate of the US dollar and inflation, the price of gold rose to the highest level in history at the beginning of 1980, exceeding $800 per ounce. Looking back on the history of the past 20 years, if the dollar strengthens against other western currencies, the price of gold in the international market will fall. If the dollar depreciates slightly, the price of gold will rise gradually. (2) The monetary policies of various countries are closely related to the international gold price. When a country adopts a loose monetary policy, due to the reduction of interest rates, the country's money supply increases, which increases the possibility of inflation and will lead to an increase in the price of gold. For example, the low interest rate policy in the United States in the 1960 s led to the outflow of domestic funds and a large number of dollars flowed into Europe and Japan. As the net dollar position held by countries increased, they began to worry about the value of the dollar, so they began to sell dollars in the international market and snap up gold, which eventually led to the collapse of the Bretton Woods system. However, after 1979, the influence of interest rate factors on gold price is weakening day by day. For example, the Federal Reserve cut interest rates 1 1 times this year, but it did not have a great impact on the gold market. Only in the "9. 1 1" incident did the gold market benefit. (3) The influence of inflation on the price of gold. In this regard, long-term and short-term analysis is needed, and it depends on the degree of inflation in the short term. In the long run, if the annual inflation rate changes within the normal range, it will have little impact on the fluctuation of gold prices; Only in a short period of time, the price rises sharply, causing people to panic, and the purchasing power of monetary units declines, will the price of gold rise sharply. Although the world has entered the era of low inflation since 1990s, the use of gold as a symbol of currency stability is shrinking. Moreover, as a long-term investment tool, gold has a lower yield than bonds, stocks and other securities. But in the long run, gold is still an important means to deal with inflation. (4) The influence of international trade, finance and foreign debt deficit on gold price. Debt is a worldwide problem, not just a unique phenomenon in developing countries. In the debt chain, not only the debtor countries can't repay their debts, which leads to economic stagnation, but also the economic stagnation further aggravates the vicious circle of debt. Even creditor countries are in danger of financial collapse because of the breakdown of relations with debtor countries. At this time, in order to maintain their own economy from harm, countries will reserve a large amount of gold, which has caused the price of gold to rise in the market. (5) International political turmoil, war, etc. Major international political and war events will affect the price of gold. The government pays for the war or in order to maintain domestic economic stability, a large number of investors turn to gold to invest, which will expand the demand for gold and stimulate the price of gold to rise. For example, World War II, the Vietnam War, 1976 coup in Thailand, and 1986 Iran-contra incident all caused the price of gold to rise to varying degrees. For example, the terrorist attacks on the World Trade Center in September this year caused the price of gold to soar to nearly $300 this year. (6) The influence of the stock market on the price of gold. Generally speaking, the stock market falls and the price of gold rises. This mainly reflects investors' expectations of economic development prospects. If everyone is generally optimistic about the economic prospects, a lot of money will flow to the stock market, and the investment enthusiasm in the stock market will be high, and the price of gold will fall. In addition to the above-mentioned factors affecting the price of gold, the intervention activities of international financial organizations and the policies and regulations of central financial institutions in China and the region will also have a significant impact on the changes in the world price of gold. The trend of gold prices in the past 30 years and the sharp drop in recent years can be mainly understood from the following aspects: First, the loss of the dominant position of gold in the monetary system. In the 1970s, with the collapse of the Bretton Woods system, gold was basically monetized, and its commodity attributes were gradually enhanced. In April 2000, the Swiss referendum abolished the gold standard, and the degree of non-monetization of gold further deepened. The new round of decline in the price of gold is a further decline in the monetary attribute of gold and a further enhancement of the commodity attribute. Therefore, the decline of gold and monetary function is the background of the international gold price falling for 30 years. Secondly, the major western economic powers sell gold, resulting in a relatively abundant supply of gold. Because the long-term value of gold reserves in European countries is underestimated, for example, the gold purchased by 1970 is only about $35 per ounce, so it is an inevitable choice to sell gold for foreign exchange and improve the value and quality of financial assets in various countries. Switzerland is ready to sell about 1300 tons of gold, accounting for about half of its gold reserves. Britain is also preparing to sell about 4 15 tons of gold, equivalent to 58% of its gold reserves; The International Monetary Fund also plans to realize 10% of its gold reserves. Third, since the 1990s, the economies of the United States and western countries have generally maintained a good development trend, with little inflationary pressure and weak demand for investment in gold preservation, making it difficult to stimulate the price of gold to rise. In addition, with the development of electronic technology, the role of gold in international settlement has declined, and the reserve cost is the highest. The birth of the euro also changed the international reserve structure of the euro zone, and the European Central Bank explicitly announced that it would reduce the gold reserve to about 15%. All these have affected the role and demand of gold, and the decline of gold price is inevitable.
[Edit this paragraph] The relationship between US dollar and gold price.
International gold quotations are all expressed in dollars, so what is the relationship between dollars and gold prices? When the dollar is strong, the dollar needed to buy goods denominated in dollars will decrease. When the dollar weakens, it will cost more dollars to buy the same goods. The change of commodity price reflects the increase or decrease of dollars needed to exchange the commodity. Therefore, the change of gold price is likely (and often is) only the change of dollar value. When the dollar strengthens, the price of gold tends to fall, and vice versa. This is part of the reason why we see the change of gold price. Another part of the reason is the change in the relationship between supply and demand of gold. If the price of gold is higher not only in dollars, but also in euros, pounds, Japanese yen and other major currencies, then we know that the demand for gold has increased and its value has indeed increased. Therefore, if the price of gold denominated in dollars becomes higher and the price of gold denominated in other currencies becomes lower, then we can draw a conclusion: when denominated in all other currencies, the dollar weakens and the price of gold actually falls. However, because the price is higher in dollars, the value of gold gives people the illusion of rising. In this case, the depreciation of gold caused by the increase of market supply is covered by the weakening dollar. We divide the change of gold price into two parts, so that we can see how much the change of gold price is caused by the strength of the dollar and how much is caused by the change of supply and demand. Interestingly, the change of gold price caused by the strength of the dollar is also applicable to other commodities denominated in dollars.
[Edit this paragraph] The relationship between crude oil market and gold price.
The price of gold is positively related to the price of crude oil. Gold and crude oil are mainly denominated in dollars. In the early 1970s, after the collapse of the Bretton Woods system, the world monetary system established after World War II, the prices of gold and crude oil were separated from the fixed exchange rate with the US dollar, and the prices soared. Especially in 1970s and 1980s, after the oil crisis broke out, the relationship between them became more subtle. The prices of gold and crude oil are closely related and balanced with each other. There is relative stability hidden in the fluctuation of each other, and there is absolute change in the surface stability. In the medium and long term, the fluctuation trend of gold price and crude oil price is basically the same, but the amplitude is different. It can be seen that the price trends of crude oil and gold are basically the same. Since the western industrial revolution, crude oil has been an important strategic material for the operation of modern industrial society, occupying a decisive position in the international political, economic and financial fields. The emergence of "Petrodollar" is enough to show the importance of crude oil in the world economy today. There is a positive correlation between gold and crude oil, that is, the price of gold and crude oil generally change in the same direction. In the past 30 years, the price fluctuation of gold and crude oil denominated in dollars has been relatively stable. The average price of gold is about $300 per ounce, and the average price of crude oil is about $20 per barrel. The relationship between gold and crude oil is 1 ounce of gold for about 16 barrels of crude oil. In the early 1970s, 65,438+0 ounces of gold was exchanged for about 65,438+00 barrels of crude oil. After the collapse of the Bretton Woods system, the ratio of gold to crude oil reached 1 ounce of gold to more than 30 barrels of crude oil. Subsequently, from the mid-1970s to the mid-1980s, the exchange relationship between gold and crude oil remained between 10 and 20 times, although the prices of gold and crude oil both rose sharply. After the mid-1980s, the price of crude oil plummeted, once reaching the level of 1 ounce of gold for about 30 barrels of crude oil. According to the average price of crude oil of US$ 56/barrel in 2005 and the international average price of gold of US$ 445/ounce, this ratio is maintained at the average level of about 1 ounce of gold to about 8 barrels of crude oil.
[Edit this paragraph] The relationship between gold supply and demand and gold price.
The price of gold is based on supply and demand. If the output of gold increases significantly, the price of gold will be affected and fall back. However, if the output is reduced due to the long-term strike of miners, the price of gold will be in short supply. In addition, the application of new gold mining technology and the discovery of new mines will increase the supply of gold, which will of course make the price of gold fall. A place may also have the habit of investing in gold, such as Japan's gold investment boom, where demand has increased greatly, leading to price increases. There are many aspects in the basic analysis of gold trend. When we use these factors, we should consider how strong their respective functions are. Find out the primary and secondary positions and influencing time periods of each factor, and make the best investment decision. The basic analysis of gold can be divided into short-term factors and long-term factors. We should treat its influence separately.