SunSirs: Strong Investment Demand, Gold is Unique

April Spot gold and silver price trend in April

SunSirs data shows that domestic precious metal spot prices of gold and silver both rose in April, among which the spot price of gold rose by 5.88% on a monthly basis, and the spot price of silver rose by 7.64% on a monthly basis.

As of April 30, the average domestic gold spot price was 378.41 yuan / gram, which was an increase of 10.47% from the beginning of the year (January, 1), which was 342.54 yuan / gram, an increase of 33.20% compared with the beginning of 2019; the domestic silver spot price was 3,664 yuan / kg, compared with the spot price of 4,281.67 yuan / kg at the beginning of the year (January, 1), a decrease of 14.43%, compared with the beginning of 2019, an increase of 1.28%.

Why is gold unique? Strong investment demand!

According to data from the World Gold Council, total gold demand in the first quarter of 2020 increased by 1% year-on-year to 1,083.8 tons.

Among them, the total demand for gold investment increased by 80% year-on-year to 539.6 tons; the total demand for gold consumption fell 28% year-on-year to 567.4 tons, compared with 791 tons in the same period of 2019; the total global demand for gold jewelry fell 39% year-on-year to a record of 325.8 tons, which is a new low; central bank net gold purchases fell 8% year-on-year to 145 tons; gold bar demand fell 19% year-on-year to 150.4 tons; total demand for technology gold fell 8% year-on-year to a new low of 73.4 tons.

Physical consumption of gold is the same as other commodities, supply and demand are weak. It is reported that the total supply of gold in the first quarter of 2020 fell by 4% year-on-year. However, the volume and price of gold in the capital market have both increased, and the inflow of gold ETFs in the first quarter of 2020 increased by 7 times year-on-year. As of the end of the first quarter of this year, the total position of global gold ETFs reached a record high of 3,185 tons.

Gold market outlook

On the macro level, under the current situation, the monetary easing policies of various countries will continue, and the real interest rate will support the price of precious metals. On the capital side, New York gold holdings are at a higher level, net speculative long positions have not changed much, and the outflow of futures disk funds has slowed. The probability of a short-term plunge is low.

On the supply and demand side, the downward trend in the supply and consumption of gold at the same time is difficult to reverse in a short time. It is reported that the global gold jewelry demand fell to a record low in the first quarter of 2020. Among them, China ’s first quarter demand for gold jewellery fell by 65% ​​year-on-year. And the foreign demand for gold jewellery in the second quarter will not be too good. Although Chinese consumption is gradually recovering, global consumption is not optimistic. Central banks around the world continue to increase their holdings of gold, the global official gold reserves increased by 145 tons in the first quarter. However, the Russian Central Bank announced that it will suspend its long-term gold reserve holding plan, and it is expected that the global central bank's net gold purchases will slow down

In view of the fact that the supply and demand factors have a weak effect on the current high-priced gold, the future market focuses on the pressure of funds liquidity and the risk of corporate credit default. Precious metal gold has a high probability of high-volatility operation.

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