Should I buy gold?

Improved economic data and lower yields on the U.S. dollar and government bonds boosted the price of gold to close up again last week. Looking ahead, the legal person believes that inflationary pressures coupled with a loose monetary stance will create a favorable environment for gold performance. With the gold price reaching a new high since January 8 this year, driving the performance of gold-related funds, the legal person recommends that active investors can moderately operate gold stock funds, but it is not appropriate to chase the highs excessively.

Franklin Securities Investment Consultants suggested that the current high inflation outlook is gradually reflected in the price of gold. Technically, gold has reached the point of convergence at the price of $1,880. It is recommended that activists buy black and not red to avoid excessive chasing high.

On the other hand, the gold mining industry continues to benefit from the high-end and volatile gold price environment. You can pay attention to small and medium-sized gold mining stocks that evaluate the attractiveness of the face. Activists can moderately operate gold stock funds, but they must do a good job in risk management.

What happened to the gold this week?

As the market expects inflation to rise, gold prices moved sharply earlier this week. However, on the trading day yesterday (27th), gold futures prices fell from the critical US$1,900 level and closed lower for the first time in the past 4 trading days. As the US dollar stabilized and US Treasury yields rose, the attractiveness of gold was weakened.

Pay attention to the 3rd quarter monetary policy

In addition, please pay attention to the personal consumption expenditure (PCE) price index released tonight. Earlier this month, the consumer price index (CPI) rose sharply, causing gold to fall more than 1% in a single day. The core personal consumer price index is expected to rise from 1.8% in March to 2.4% in April. Higher-than-expected readings may trigger a similar reaction, and vice versa.

Given the smooth progress of vaccine delivery, discussions on reducing the scale of debt purchases may begin at the monetary policy meeting in the third quarter (scheduled to be held from September 21 to 22) at the earliest, and the risk of gold investment may increase substantially. , It is recommended to pay attention to the hedging operations of gold reverse products.

Gold price’s prospect analysis

54% of FXStreet experts expect the price of gold to continue to rise. However, the average target of $1,870 shows that some experts believe that there will be a deep adjustment during this period. Looking at the one-month outlook, the bullish outlook remains unchanged, with an average target price of $1,897.

In addition, Incrementum AG released its 15th annual report "In Gold We Trust" last night (27th), emphasizing the growing threat of inflation in the global market, which is expected to push up gold prices in the next 10 years.

Some analysts have pointed out that in the face of increasing debt, the government generally responds by adopting financial repression (Financial Repression).

Looking back at history, at the end of the Second World War, the US debt accounted for nearly 120% of GDP, while the UK’s was 250%. By the early 1970s, the debt-to-GDP ratio of the United States had fallen to about 25%, and that of the United Kingdom had fallen below 50%. How to achieve it? Through financial repression, it is to limit the yield of government bonds to a level far below the inflation rate.

In the next 10 years, real interest rates are likely to be negative. In this market environment, tangible assets, especially commodities, choosing the right stocks, and precious metals are all a solid foundation for the investment portfolio.