Behind the rise in gold prices

Recently, gold prices have continued to rise, since July this year, the international gold price from 2364.21 US dollars per ounce all the way up to 2728.89 US dollars per ounce. In less than 3 months, gold once climbed more than 15%, investors have joined the gold market, the gold market once again ushered in "investment fever." However, whether there is a certain risk in gold investment, what is the root cause of the high gold price, and how we should treat the rising gold price, these issues need to be further thought and explored.

Gold prices are often influenced by geopolitical risks. In recent years, the international situation has become increasingly grim, and geopolitical risks have become increasingly prominent. Because "gold is naturally money", gold has good hedge properties. On the one hand, the war between Russia and Ukraine has not yet ended, and more and more countries are involved in the war. On the other hand, political risks in the Middle East continue to evolve and gradually escalate. The tense geopolitical factors make the relevant countries' currencies continue to depreciate, and the distrust of the currency makes the value of gold further apparent.

Gold prices are also affected by financial risks. Since the collapse of the Republic Bank of the United States in April 2023, the fragility and instability of the financial system has been increasingly concerned, and the new wave of bank failures has made financial risks once again come into the public eye. The inability of banks to withdraw money led to mistrust of the current financial system, and gold was once again favored for its safe-haven properties.

Capital inflows into the gold market are another reason for the high price of gold. Based on concerns about geopolitical risks, the world's major economies have shipped back from the United States to their own reserves of gold, and the increase in the amount of gold reserves in various countries, to a certain extent, affected the supply and demand of gold, coupled with major media reports, financial investment institutions in many places in the world have also bought gold, in the market chain reaction, a large number of capital inflows for the rise of gold prices.

The psychology of blindly following the trend is another reason for the rise in gold prices. As an investment target, gold itself not only has the properties of hedging and hedging, but also has certain investment performance, and investor sentiment can often affect the short-term trend of an investment target. Due to the influence of various factors in the initial stage, the price of gold continues to rise, and ordinary investors, under the guidance of public opinion, have the psychology of chasing high and rising, which leads to further funds flowing into the gold market, thus making the price of gold rise again in the short term.

The financial instruments of the gold market provide unstable short-term support for the price of gold to climb. Due to the general slowdown in economic growth of countries around the world in recent years, countries have introduced looser financial policies in order to increase market liquidity, and the use conditions of various financial derivatives such as gold options and ETFs have been relaxed. These financial instruments not only provide investors with more convenient investment methods, but also lay hidden risks to a certain extent. For example, the use of leverage tools can support a sharp rise in an investment target in the short term, but it is also easy to cause the explosion of shorts. Once there is a fundamental change in the direction of the gold market, the short-term support of financial instruments for gold prices will quickly decline.

In the face of rising gold, investors should remain rational and government departments should take the initiative.

First of all, investors should be sensible and avoid the mentality of blindly following the market. Second, to strengthen their own asset management, risk control, to ensure correct investment; Thirdly, investors should maintain an open stance, pay attention to the market at any time, make investment decisions flexibly according to the specific situation of the market, and avoid unnecessary decision-making errors that lead to their own damage.

Relevant departments should strengthen market supervision, improve relevant laws and regulations in a timely manner, guide relevant agencies to report positively, and reduce the unhealthy reaction caused by negative public opinion in the gold market; Relevant policies should be reasonably adjusted, based on constantly promoting the steady and orderly development of the market, and ensuring the green and healthy financial market.

In short, for the recent rise in gold prices, investors need to fully understand the various factors that promote the trend of gold prices, and prudently evaluate investment risks; Relevant government departments should strengthen policy guidance, properly grasp the Angle and degree of policy, and promote the orderly operation of the financial market when the gold price is rising.