This week, the same scene appeared in March again. Gold fell back to 1860. Some readers asked me to analyze the trend of gold price in the second half of the year. What is the liquidity crisis? Will gold prices continue to decline?
To understand these problems, we must first understand the reasons for the gold pullback. In fact, this reincarnation conditioning was mentioned last week
The first is the further spread of the epidemic in Europe this week, with the economy recovering from weakness before mass production of the vaccine. The liquidity crisis caused by this expectation led to the devaluation of the euro, and the opposite dollar index naturally rose sharply. As some funds withdrew from risk assets and returned to the US dollar, it also caused the short-term decline of global commodities, including gold!
The world currency has no anchor. With us dollars, we believe in the government credit behind the United States. For example, the United States used to give full credit scores from 0 to 100.
This epidemic situation, the United States cut off supplies from all countries, no integrity to print money, bullying do not become robbers. Duke Huan of Qi and Duke Wen of Jin had too much work to do. The U.S. credit score goes from 100 to 80-90, as do other western countries. When money has no anchor, gold becomes an anchor..
Bullish reason: hedge the next black swan with gold!
First of all, from the macro-economic point of view, it is difficult for the global economy to return to a better growth attitude when the epidemic situation is spreading again. According to the data of the Federal Reserve, the economic recovery is extremely difficult in the first half of 2022!
The social uncertainty caused by the economic downturn makes it difficult for the Federal Reserve to tighten monetary policy in the next two years. It is highly likely that the Federal Reserve will further push forward the monetary stimulus policy (continue to release water). Real interest rate down, medium term very sure!
After the US election, the Federal Reserve will inject new impetus into the market to stimulate economic growth. As the most important risk hedging tool in asset allocation, gold has high value. This wave of adjustment of gold price has not destroyed its essence. Readers should not be disturbed by short-term capital factors!