release time:2023/2/11
According to the Global Gold Demand Trend Report released recently by the World Gold Association, the global gold demand will increase by 18% year-on-year in 2022, reaching 4741 tons, the highest annual total demand since 2011; The total global gold supply increased by 2% year-on-year to 4755 tons, and the global gold production also reached a new high in four years, reaching 3612 tons. It is needless to stress that the major driving factors are the strong purchase of gold by central banks and the continuous strengthening of retail gold investment. According to the data provided by the World Gold Association, in 2022, the global central bank's annual demand for gold purchase reached 1136 tons, more than double the 450 tons in 2021 and hit a new high in 55 years. In the fourth quarter of last year alone, the global central banks purchased 417 tons of gold, and the total amount of gold purchased in the second half of the year exceeded 800 tons.
There is a saying in the industry that in the past 10 years, gold has completed the role change similar to "ugly woman turn over" in the asset package of central banks, that is, it has changed from a relatively marginalized asset to a good choice to hedge the risk of exchange rate fluctuations and reserve diversification. In the past, it was necessary to restrict the central banks from selling gold in the market through the central bank's gold sales agreement to avoid oversupply. Now, after a long absence, the central banks have returned to the gold market.
What is the motivation for central banks around the world to increase their holdings of gold reserves? Some media quoted the analysis of Wall Street hedge fund managers as saying that the global central bank's move is mainly to hedge the debt default risk of some highly indebted countries; The increase of gold holdings can also ease the fluctuation of the net value of the entire foreign exchange reserves, ensure the basic stability of the scale of foreign exchange reserves, help stabilize the exchange rate of the domestic currency, and avoid disorderly depreciation. In addition, it can further get rid of the excessive dependence on the dollar and reduce the impact of the dollar hegemony on the domestic financial system. According to Zhang Wen, a researcher at CITIC Futures Co., Ltd., since 2022, the Federal Reserve's sharp interest rate increase has led to a sharp rise in the yield of US Treasuries, which is a loss to foreign exchange reserves of all countries. At this time, some central banks chose to sell US bonds to increase their holdings of gold, with the intention of avoiding the expansion of losses.
Take a simple example. At the end of last year, the Bank of Japan announced that it would raise the upper limit of the yield target range to about 0.5%, higher than the previous upper limit of 0.25%. The sudden "turn" of the Bank of Japan, together with the Black Swan events such as Ghana's announcement to suspend the payment of euro bond debt, and the constant thunder of the crypto digital asset industry, has had a major impact on the global financial market, and gold with prominent risk aversion attributes has thus won more favor in the capital market.
Just a few days ago, the Federal Reserve announced a 25 basis point increase in interest rates, raising the target range of the federal funds rate to 4.5% to 4.75%. The Bank of England on the other side of the Atlantic followed suit, announcing a 50 basis point increase in interest rates and raising the benchmark interest rate to 4%. The European Central Bank also simultaneously raised the three key interest rates in the euro area by 50 basis points. On February 6, the gold futures price of the New York Stock Exchange in April closed at 1879.5 US dollars/ounce, still at the highest point in several months.
Xia Yingying, director of metal research at the South China Research Institute, pointed out that the rise of gold price was mainly affected by three factors: first, the US non-agricultural employment report for December 2022 released at the beginning of this year showed that the US employment market continued to slow down in general, and the inflationary pressure also declined. The expectation of the Federal Reserve's interest rate increase slowed down, resulting in the decline of both the US dollar and US bond yields, which was bullish on gold valuations; Second, the World Bank recently lowered its global economic growth forecast for 2023 from 3% growth in June last year to 1.7% growth, reflecting the slowdown of global economic growth and even the further increase of recession pressure, which will increase the demand for precious metal hedging in 2023, and strengthen the Federal Reserve's monetary policy margin loosening forecast; The third is the increase in investment demand, and the global gold buying boom is expected to resume. For example, since November 2022, the gold position of SPDR, the world's largest gold ETF fund, has changed from the previous sell-off to a small net inflow.
Senior market analyst of the World Gold Association said that the economic environment in 2023 is expected to remain challenging, and the possible recession of the global economy may have different impacts on different sectors of gold investment. The fall of inflation rate may adversely affect the investment of gold bars and coins; The continued weakening of the US dollar and the slowing pace of the Federal Reserve's interest rate increase are expected to play a positive role in boosting the demand for gold ETFs. In addition, the demand for gold in the Chinese market is being released rapidly, which helps to maintain the resilience of gold jewelry consumption; However, if there is downward pressure on the economy, the demand for gold jewellery consumption may also be dragged down by the squeeze of consumer spending. Looking forward to 2023, the "hoarding" trend of global central banks may continue.
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