On Wednesday, both spot gold and gold futures soared to historic highs, with a price difference of up to $24.23 per ounce. Foreign institutions such as Bank of America, Goldman Sachs, and UBS generally see gold prices rising, but some Chinese domestic institutions are bearish on gold.
Spot gold climbed to $2670.52 on Wednesday, hitting a historic high for the fourth consecutive day. Gold futures also reached a record high at $2694.75 before retreating to $2658.02 and $2682.35, respectively.
Goldman Sachs analyst Robert Quinn and his team released a report stating that the rise in gold prices has just begun, reaffirming their bullish view on gold and maintaining a target of $2700 per ounce by 2025.
The commodity strategy team at Bank of America believes that the gold price trend aligns with their previous estimates, maintaining their forecast of surpassing $3000 per ounce next year.
Goldman Sachs provides three reasons for the bullish outlook on gold: central banks worldwide continue to buy gold, rate cuts by the Federal Reserve will drive capital back into gold ETFs, and gold provides important hedging value for investment portfolios against geopolitical uncertainties.
According to data from the World Gold Council on September 6th, reports from the International Monetary Fund and other public sources show that central banks globally purchased a net of 37 tons of gold in July, a 206% increase from the previous month and the highest monthly growth since January.
Some Chinese domestic institutions also agree with the bullish view on gold.
Zhao Jiayu, an analyst at CMB Futures, believes that from a diversified investment perspective, precious metals are still worth allocating more to hedge against currency credit risks. He emphasized that the rise in precious metals is driven not by actual interest rates in the current global easing system, but by the monetary credit risks that the system can no longer sustain.
However, some Chinese institutions believe that the benefits of the Fed rate cut have already been priced in and predict a future downturn in gold prices, advising investors to take profits.
China CITIC Securities stated that the gold price surpassed $2600 after the Fed cut rates by 50 basis points in September. While the rate cut is positive for gold prices, the market had already priced it in, and the slowdown in the US economy and inflation behind the rate cut will suppress gold price upside in the future.
China CITIC Securities recommends profit-taking at the current position above $2600 and suggests a core fluctuation range of $2300 to $2500 in the short term.
The price difference between futures and spot gold is an important indicator of investment enthusiasm. A positive difference indicates that investors are optimistic about future market trends.
At the end of July this year, this price difference once reached nearly $50 per ounce, reaching a new high since March 2020. Currently, the price difference has not yet narrowed, and the net long positions in the gold market are still rising.
The Commodity Futures Trading Commission’s Commitments of Traders report showed that as of September 17, net long positions (bullish) in COMEX gold increased by 25,260 lots to 252,600 lots over a week.
Among them, the long positions of managed funds reached 240,000 lots, an increase of 28,000 lots in a week, reaching a high since 2020. On the other hand, short positions represented by mining companies have been hovering around 90,000 lots, with only a 10,000 lot increase in the past three months.