Both gold futures and spot prices have surged past $4,700. On January 20th, the price of spot gold climbed to $4,701.48 per ounce, while COMEX gold reached $4,707.4 per ounce, setting new historical highs.
Since January 1st, spot gold has been on a relentless upward trajectory, swiftly breaking through the $4,400, $4,500, $4,600, and $4,700 barriers. Year-to-date, it has accumulated gains exceeding 8%. As of the time of writing, the gains have narrowed slightly. Domestic gold jewelry prices have also risen significantly, with the quoted price for pure gold from multiple brands surpassing 1,450 yuan per gram. Specifically, Lao Miao pure gold jewelry was quoted at 1,455 yuan/gram; Lao Feng Xiang pure gold jewelry at 1,456 yuan/gram; and Chow Tai Fook pure gold jewelry at 1,455 yuan/gram.
Michael Hartnett, Chief Investment Strategist at Bank of America, believes the new world order is fostering not only a stock bull market but also a gold bull market. Although gold, and particularly silver, are overbought in the short term—with silver prices 104% above their 200-day moving average, representing the most overbought level since 1980—the long-term logic for gold's rise remains intact. While overbought bull markets always experience strong pullbacks, it can be argued that a higher allocation to gold is still justified. Currently, Bank of America's high-net-worth clients have an average gold allocation of just 0.6%. Considering that the average gain during the four major gold bull markets of the past century was approximately 300%, gold prices have the potential to exceed $6,000.
Wang Xiang, a fund manager at Bosera Funds, suggests that since the start of the new year, ongoing conflicts in the US and South America, as well as Northern Europe and the Middle East, have fueled expectations of geopolitical risks spreading to South America following the attack on Venezuela. Concerns over resource security have driven a broad strengthening in metals. Amidst escalating rhetoric over Greenland, which recently culminated in tariff threats against European countries, the intertwining of geopolitical and trade risks provides strong support for gold prices. Simultaneously, the annual rebalancing of the Goldman Sachs Commodity Index is largely complete. After the short-term impact subsides, trend-following funds are expected to re-enter the market, evidenced by the global largest gold ETF, SPDR, adding over 20 tonnes last week. Overall, compared to other precious metals, gold, due to its geopolitical sensitivity and utility as a hedge, is likely to receive alternating support from other factors even as expectations for monetary easing undergo a temporary reassessment, making its long-term outlook favorable.
For individual investors, an analysis from Galaxy Futures on the 20th indicated that for the short-term outlook of gold and silver, caution is still warranted due to the combined influence of policy, capital flows, and market sentiment. Silver, with its stronger financial and industrial attributes, is expected to maintain a pattern of high prices and high volatility. Gold, as a core safe-haven asset, is likely to exhibit relatively more stable performance.
