In the first half of the year, gold investment demand was strong, with gold bars and gold coins becoming popular investment categories in the market. Periodic corrections in gold prices drove sales of gold bars through bank sales channels to grow.
In the second half of the year, factors such as high geopolitical risks and low domestic government bond yields will continue to support the long-term strategic allocation demand for gold.
Since the beginning of this year, against the background of high gold prices, my country's gold market has shown distinct structural differentiation characteristics, and investment demand has become an important force supporting the market. Data from the China Gold Association shows that my country’s gold consumption in the first half of the year was 511.412 tons, a year-on-year increase of 1.23%. Behind the stable total data is the significant differentiation of the trends of each sector. Among them, gold jewelry was 132.133 tons, a year-on-year decrease of 33.88%; gold bars and gold coins were 339.336 tons, a year-on-year increase of 28.42%; industrial and other gold was 39.943 tons, a year-on-year decrease of 2.90%. Between rising and falling, gold's investment attributes have become increasingly prominent.
The high gold price fluctuations and the implementation of the new gold taxation policy have significantly suppressed the demand for traditional gold jewelry. The relevant person in charge of the World Gold Council pointed out that factors such as rising global geopolitical uncertainty have made consumers remain cautious. At the same time, high gold prices have pushed up the cost of gold used by industrial enterprises, and the amount of gold used in industry has also declined. In addition, despite the sharp decline in the tonnage of gold jewelry demand, consumer spending on gold jewelry products continues to rise, driven by higher gold prices.
In sharp contrast to the pressure on the consumer side, gold investment demand is strong. Gold bars and gold coins have become popular investment categories in the market. Periodic corrections in gold prices have driven growth in gold bar sales through bank sales channels. "This trend reflects the market's demand for risk hedging, wealth preservation and income acquisition." The above-mentioned person in charge of the World Gold Council believes that the market expects future policy interest rates to fall, government bond yields to fall, and factors such as the central bank's continued announcement of gold purchases, which together boosted the sales of gold bars and gold coins in the first half of the year. In addition, most investment-oriented gold products are still exempt from VAT, and the investment sector is basically not affected by changes in VAT policies. The policy dividends further strengthen the comparative advantages of the investment category.
Gold ETFs also show the popularity of investment demand. In the first half of this year, domestic gold ETF positions increased by 28.677 tons, a decrease of 66.17% from the first half of last year. As of the end of June this year, domestic gold ETF holdings were 276.529 tons. Although the increase in positions has declined compared with the same period last year, the size of positions is still at a historically high level, indicating that investors' willingness to allocate gold in the medium and long term remains solid. In terms of exchanges, in the first half of the year, the cumulative unilateral trading volume of all gold varieties on the Shanghai Gold Exchange was 16,100 tons, a year-on-year decrease of 4.37%; the cumulative unilateral trading volume was 16.57 trillion yuan, a year-on-year increase of 36.75%. The decline in trading volume and the increase in trading volume were mainly affected by the high gold price.
The monetary attributes of gold are fully reflected in the central bank's gold purchase behavior. The World Gold Council report shows that global central banks net purchased 289 tons of gold in the second quarter, a significant increase of 62% year-on-year. Long-term buying by central banks has established a solid bottom for gold prices. From a global perspective, important support for the strength of gold prices comes from the continued and large-scale gold purchases by central banks around the world, which sends an important signal to investors and helps support broader investment interest during a period of heightened market volatility.
Entering August, gold prices once again experienced a strong rise, further igniting the market's investment enthusiasm. On August 11, London gold exceeded US$4,400 per ounce, hitting an intraday high of US$4,435.255 per ounce. This round of rapid rise in gold prices is directly caused by the fact that U.S. employment data fell short of expectations, and the market's judgment on the Federal Reserve's monetary policy quickly changed. Prior to this, the London spot gold fixing price at the end of June was US$4,026.05/oz, down 8.22% from the beginning of the year; the closing price of Au9999 gold on the Shanghai Gold Exchange was 879.03 yuan/g, down 11.21% from the opening price at the beginning of the year of 990 yuan/g.
From the phased correction at the end of June to the rapid surge in August, the trend of gold prices can be described as ups and downs. It is worth noting that during the rise, many investors showed the behavioral characteristics of buying and chasing high prices, which to a certain extent aggravated the volatility of the short-term market. Tian Lihui, a professor of finance at Nankai University, believes that ordinary investors often enter the market after the trend is widely confirmed by the media. At this time, the price has been fully priced or even exceeded expectations. What should be guarded against is turning allocation behavior into speculative behavior, using leverage or concentrating heavy positions in a highly volatile environment.
In the second half of the year, the industry generally believes that gold investment demand is expected to remain strong. The World Gold Council report believes that high geopolitical risks and low domestic government bond yields will continue to support the long-term strategic allocation demand for gold. At the same time, if the central bank continues to announce gold purchases, domestic investors can continue to pay attention to gold investments.
Tian Lihui pointed out that the multiple narrative logic supporting gold has not collapsed, and the structural force of the central bank's gold purchase has more long-term inertia. However, the continued rise in gold prices requires new marginal increments to maintain. If the geopolitical situation stabilizes or the Fed's interest rate cut expectations are fully digested, a high shock correction is inevitable. "Gold investment demand is likely to continue to be strong in the second half of the year, but it will show a structural continuation of high fluctuations. Investors should use allocation thinking to go through the fluctuation cycle." Tian Lihui said.
(Economic Daily reporters Zhai Zihao and Ma Chunyang)
