International gold prices are under short-term pressure, falling to $3120 per ounce at one point, but long-term fundamental support remains unchanged

International gold prices hit a low of $3120 per ounce: The logic behind market volatility and future trends | | | Recently, the international gold market has experienced severe fluctuations, with spot gold prices falling to $3120 per ounce, hitting the lowest point in nearly half a year. This trend has attracted the attention of global investors, and doubts about the safe haven nature of gold have resurfaced in the market. This article will analyze the driving factors behind the decline in gold prices and explore possible future trends.

1、 The three major causes of the decline in gold prices | | | The strengthening of the US dollar suppresses gold prices | | The Federal Reserve recently released a "hawkish" signal, suggesting that it may delay or even restart interest rate cuts, pushing the US dollar index to a high point for the year. Due to the fact that gold is priced in US dollars, the appreciation of the US dollar directly weakens the attractiveness of gold, leading to capital outflows from the precious metal market.

Alleviation of geographical risks weakens the demand for risk aversion | | | Progress has been made in the negotiations on the Russia-Ukraine conflict, the situation in the Middle East has eased periodically, and market risk appetite has rebounded. Traditional safe haven asset gold has experienced a sell-off, with some funds shifting towards high-risk assets such as the stock market and commodities.

Technical selling exacerbates volatility | | | When the gold price falls below the key support level of $3200/ounce, algorithmic trading and stop loss selling are triggered, forming a "long kill long" situation. Data shows that the number of open interest contracts in COMEX gold futures has sharply decreased, indicating that short-term speculative funds are withdrawing.

2、 Institutional divergence: turning point or downward relay?

Bearish view: Goldman Sachs report suggests that if US economic data remains strong, gold prices may drop to the psychological level of $3000;

Bullish logic: The World Gold Council (WGC) believes that global central bank gold demand (up 23% year-on-year in Q1 2024) and Asian physical gold consumption will provide long-term support.

3、 How should ordinary investors respond?

Short term traders: Pay attention to the resistance zone of 3180-3200 US dollars. If the rebound is weak, be alert to a second dip;

Long term holders: can refer to the 200 day moving average (currently around $3050) as a reference for building positions in batches;

Asset allocation reminder: It is recommended to maintain the proportion of gold in the investment portfolio at 5% -15% to avoid single asset risks.

Outlook for the future: The June Federal Reserve interest rate meeting will be a key milestone. If inflation data exceeds expectations, gold prices may continue to adjust; On the contrary, the resurgence of economic recession concerns may drive gold to regain its favor. In market fluctuations, investors need to rationally distinguish between "price fluctuations" and "value changes".