Alpha Trade：How long will the gold game last?

[AlphaTrade]

Alpha Trade：How long will the gold game last?
The product that has attracted investors' attention recently is none other than gold. After breaking through a new high of US$2,080 in 2020, it has been soaring, and gold has been cheating, reaching US$2,400 per ounce. So will gold turn around in the future?

First of all, in the current environment, the main global issue is the fight against inflation. Central banks in major developed countries have raised interest rates to deal with inflation. But don’t forget that gold has always been promoted as an “artifact” against inflation, so In this wave of anti-inflation interest rate hikes, gold has been favored and participated in the fight against inflation. This is easy to understand.

The second triggering factor is related to the international war. The situation in West Asia continues to be tense. Israel and Palestine and Iran continue to conflict, especially between Israel and Iran. The deepening of the conflict may involve the issue of nuclear weapons. The international community is quite nervous about this matter. There are also The situation in Yemen is also not peaceful, and the overall political situation has also increased risk aversion.

Finally, there is the energy issue. Russia announced that the country’s energy exports will only accept settlement in gold, rubles and RMB. For a long time, Europe has been highly dependent on Russian natural gas. Now, Russia’s payment methods restrictions in order to counterattack have also been restricted to a certain extent. Adding to the buying sentiment for gold.

So, gold won’t come down?

First of all, economically, global regional inflation data must drop significantly and basically return to the inflation target levels set by central banks. Only in this aspect of anti-inflation can gold reduce the demand for buying. Recently, various countries are discussing when to cut interest rates, so at this point, gold has certain potential downward momentum.

However, in the international environment, the situation in West Asia may be difficult to calm down in the short term, and Russia’s energy payment issue is not expected to be resolved in the short term. After all, Russia does not intend to compromise on the Ukraine issue for the time being.

To sum up, gold may have room to fall in the short term, but there is really not much momentum. Looking at the short-term price, if it can return to US$2,300 per ounce, it is already the best room for gold to correct at this time.