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Recently, the trend of gold prices has attracted much attention, and from the beginning of this year to the first half of the year, gold prices have shown a volatile upward trend. Before April 22, the international gold price repeatedly hit record highs. After April 22, gold prices "braked" overnight, hitting the largest single-day decline in nearly two years. Entering May, after the gold price hit a maximum of $2,450.1 per ounce on May 20, the price lacked upward momentum and the price fell back from a high level.
Since June, gold prices have continued to fluctuate. As of June 6, COMEX gold futures rose 0.83% to $2,395.2 an ounce. On June 26, local time, spot gold fell below the psychological integer level of $2,300, reaching the lowest level in nearly three weeks since June 7. According to the data, on June 28, London spot gold closed at $2,326.15 per ounce, and COMEX gold futures closed at $2,336.9 per ounce, up about 12% and 13% respectively from the beginning of the year.
Driven by international gold prices, the spot gold price (AU9999) announced by the Shanghai Gold Exchange closed at 549.88 yuan / gram on June 28, an increase of about 13% compared with the beginning of the year. Domestic pure gold jewelry prices also ushered in a sharp rise in the first half of the year, and the price of pure gold jewelry announced by many gold jewelry brands on June 30 was about 715 yuan/gram, an increase of about 90 yuan/gram compared with the beginning of the year.
Liu Yuxuan, senior researcher of precious metals at Guotai Junan Futures, analyzed that the trading logic of precious metals in the first half of the year showed the following characteristics: first, the U.S. economy continued its resilient performance in the first quarter, and the macroeconomic data showed an obvious "staggered downward trend", and marginal changes in the economy became the focus of macro sentiment and asset allocation paradigm changes; Second, the rise in gold prices benefited from abundant market liquidity and global central banks continued to increase their holdings of gold reserves. Third, in the first half of the year, the gold market showed a "split" with interest rates and the trend of the US dollar. However, Liu Yuxuan believes that the essence of the negative correlation between interest rates and gold prices will not fail, and should not be obsessed with the inevitability of the return of the center of gravity of the two, and needs to be supported by a dynamic perspective of both long-term and short-term.
Looking back at the development of the gold industry:
- Growth in global gold production
From the perspective of gold production, according to the statistics of the World Gold Council, global gold mine production continued to grow from 2015 to 2018, reaching a peak of 3,655.84 tons in 2018; From 2019 to 2020, gold mine production showed negative growth, partly affected by factors such as the epidemic, high mining costs, and the increasing difficulty of mining the remaining gold mines. Growth resumed again in 2021-2022, close to the previous peak, with global mine production of 3,627.72t in 2022. In the first half of 2023, global mine production totaled 1,780.5t.
-- China is the world's largest gold producer
According to the statistics of the World Gold Council, the global gold mine output in 2022 will be 3,627.72 tons, with China, Australia and Russia accounting for 1/3 of the world's gold production, and the top five major gold producing countries accounting for 45% of the gold production. China is the world's largest gold producer, accounting for nearly 11% of global mine production in 2022, followed by Australia and Russia at 10% each.
Judging from the production data, from 2017 to 2021, the mainland gold supply entered a landslide channel, and returned to the upward channel in 2022. According to statistics from the China Gold Association, the output of raw gold in mainland China in 2022 was 372.048 tons, an increase of 43.065 tons compared with the same period in 2021, a year-on-year increase of 13.09%. Among them, 295.423 tons of gold were mined and 76.625 tons of non-ferrous by-product gold were produced.
In the first three quarters of 2023, the domestic raw gold output was 271.248 tons, an increase of 1.261 tons compared with the same period in 2022, a year-on-year increase of 0.47%, of which 214.866 tons of gold were completed from gold minerals and 56.382 tons of non-ferrous by-product gold.
- Growth in global gold demand
From the perspective of global gold consumption demand, the consumption of gold in mainland China fluctuated from 2015 to 2022. Gold demand in 2022 was the strongest growth in recent years, with global demand surging 18% to 4,740.7t, the fastest growth rate in recent years. Among them, the demand in the fourth quarter of 2022 increased significantly, which was the highest single-quarter demand in the past decade, thus contributing greatly to the high growth of demand in the whole year of 2022. In the first half of 2023, global gold demand reached a cumulative 2,460.1t.
The downstream demand for gold can be divided into gold jewelry, industrial applications, gold coins and gold bars, gold ETF investment demand and central bank reserves. According to statistics from the USGS, jewellery is the largest consumer market for gold, accounting for 47% of demand in 2022. This is followed by central bank reserves, accounting for 20%.
From the perspective of mainland gold consumption demand, the consumption of gold in mainland China fluctuated from 2017 to 2022. In 2018, the country's gold consumption peaked at 1,151.43 tons; Affected by the epidemic in 2020, the annual gold consumption demand fell to 821 tons, the lowest value in recent years. In 2021, it surged by 36.5% year-on-year to 1,121 tons; In 2022, mainland gold consumption fell again to 1,001.74 tonnes; In the first three quarters of 2023, a total of 835.07 tonnes of gold was consumed.
Lu Weijia, trading director of Heraeus Precious Metals China, said that in the environment of increasing global economic and geopolitical uncertainty, gold's safe-haven properties have supported the investment demand for gold. The short-term gold price is expected to fluctuate in a wide range from the high of $2,250 to $2,350 per ounce. In the medium and long term, the arrival of the US dollar interest rate cut cycle and uncertain geopolitical factors still have the opportunity for gold prices to rise.
Lai Fuyang, an analyst at the Industrial Securities Economics and Finance Research Institute, said that silver has both industrial demand and investment attributes, and the gap between silver supply and demand is gradually expanding, and silver is expected to usher in new opportunities under the gold bull market.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
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