On May 13, the topic #Gold Price Collapsed Again# became a hot search on Weibo, attracting attention.

Recently, China-US tariff negotiations have eased, risk aversion sentiment has cooled down, gold fell below the $3,300 mark, and the prices of gold jewelry in many domestic gold stores have dropped below 1,000 yuan.

Public funds believe that although gold fluctuates at a high level and there is still a risk of a pullback in the short term, the sector's long-term investment logic is still there, and it may be possible to seize the layout opportunity, buy on dips or invest in gold allocation.

Risk aversion sentiment cools down and gold prices plunge

After the market on May 12, China and the United States issued a joint statement, with the reduction of both China and the United States tariffs exceeding 100%. Affected by this, gold prices plunged sharply after the market, with a single-day decline of more than 3%.

Since the beginning of this year, the cumulative increase of gold prices has exceeded 23%, and in March, the price of gold exceeded the $3,000 mark for the first time; in April, the price of gold hit historical highs many times. On April 22, the spot gold price broke through the $3,500 threshold for the first time, and then adjusted for many consecutive days, and rose sharply again on May 5.

Recently, gold prices have fluctuated sharply again. London gold prices fell sharply from a maximum of $3,500 per ounce, and the lowest has dropped to $3,201 per ounce, a drop of as much as 5%.

Huaan Fund believes that the gold market soared due to the tariff escalation in April, with the signs of easing tariffs since April 23, and the previous gold overheating market has also received a round of healthy correction.

Huaxia Fund said that after the negative news in the gold sector gradually ended, there was an opportunity to buy on dips. The rapid adjustment of gold prices recently was the direct factor that China-US economic and trade relations, Russia-Ukraine conflict, India-Pakistan conflict, etc. have all eased, investors' risk aversion sentiment has declined, and follow-up funds in the previous rise have gradually weakened.

"The domestic market opened after Labor Day, and gold bulls made a comeback, driving the overall precious metals market to rebound slightly. Then, against the background of the advancement of trade negotiations and the Federal Reserve's interest rate meeting remained unchanged, the US dollar index rebounded slightly, risk appetite rebounded, and gold returned to the adjustment trend." Yao Xi of GF Fund analyzed.

How to move forward in the future?

Although international gold prices have fallen sharply, historically, the increase this year is still at a historical high. Standing at the moment, the market's attention to the next stage of gold has increased significantly.

Yao Xi of GF Fund believes that in the short term, the Federal Reserve's decision-making lags behind the tariff policy. Because the short-term economic data of the United States is resilient, the probability of adopting a preventive interest rate cut is relatively low. However, the marginal ease of Sino-US trade frictions, the market's short-term risk appetite rebounds, and the short-term gold price may be slightly insufficient to move forward, which may continue to fluctuate.

"But it is worth noting that the medium- and long-term upward fundamentals of gold prices have not changed yet, and the US dollar credit contraction cycle under anti-globalization is still the core support for gold's long-term performance. The US employment data exceeded expectations in the month but was significantly revised downwardly at the same time, which may mean that the US economy has always faced structural contradictions. Therefore, driven by fundamentals, the medium- and long-term performance of gold prices may still be worthy of attention." Yao Xi pointed out.

Wang Xiang of Boshi Fund believes that the overall risk appetite in the market may rebound marginally, and gold is still in a relatively headwind scenario, but the medium- and long-term global game pattern also determines that it is difficult to adjust significantly, and range fluctuations may be the main manifestation of the subsequent period.

Rongying pointed out that the international situation is changing and concerns about economic recession, the demand for safe-haven aversion has increased significantly, and the continuous wave of gold purchases and global interest rate cuts in emerging countries has continued. Under the trend of de-dollarization, gold prices are expected to continue to strengthen.

A callback or a good opportunity to buy

Many public fund companies said that for investors, after a phased pullback, the cost-effectiveness of gold allocation has gradually become prominent. In the uncertain global economic outlook, gold as an effective hedging tool cannot be ignored.

Huaan Fund said that gold still has allocation value, mainly based on the following logic: First, the implementation of tariff easing incidents will release negative news on gold. Referring to the experience of the trade war in 2018, there is still uncertainty in subsequent negotiations, and safe-haven funds still have allocation demand for gold. Second, pay attention to the pressure on stagflation in the United States. Third, the Fed's interest rate cut cycle is still underway. Fourth, US debt contradictions weaken the credit of the US dollar and support the central bank in purchasing gold.

Huaxia Fund pointed out that if ordinary investors consider allocating gold, they must pay attention to position control, first, they must pay attention to position control. Gold is more suitable as a part of asset allocation rather than a heavy position or a single layout. The usual position proportion is 5% to 10%; second, they must choose a gold product that suits them based on their own risk tolerance, investment expectations and funding period.

For investors seeking short-term returns, the current market volatility provides rich trading opportunities, and can flexibly adjust positions according to rise and fall based on the rise and fall based on the relative high or adjustment of gold prices. If you focus on long-term investment, then the current pullback may be a good buying opportunity.

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[Editor in charge: Song Jingcheng PF214]