International gold prices have rebounded since August, reaching a peak of $4400 per ounce. As of August 16th, the international spot gold price was $4375.29 per ounce, up 8.27% from the closing price at the end of July.

Against the backdrop of the rebound in international gold prices, gold ETFs, as a convenient investment tool for gold, have become the target of capital pursuit. As of August 16th, the total size of 14 gold themed ETFs in China was 271.5 billion yuan, an increase of 72.1 billion yuan in the past week. Among them, the Hua'an Gold ETF inflow was 5.013 billion yuan in the past week, and the fund size returned to the level of billions of yuan. Domestic brand gold jewelry prices have risen synchronously, with many brands quoting nearly a thousand yuan per gram for full gold jewelry.

But the hotter the market, the more investors need to remain calm and see the risks behind the rise in gold prices.

The return of gold prices to $4400 per ounce in this round is the result of multiple positive factors resonating together. At the macro level, the non farm payroll data in the United States has significantly weakened, the job market has cooled down, and the market has rapidly lowered its expectations for the Federal Reserve to continue raising interest rates. The real yield of US bonds and the US dollar index have both fallen, directly reducing the opportunity cost of holding gold as an interest free asset and becoming the most direct catalyst for the market. At the market level, after the rapid correction of gold prices in the early stage, short positions were replenished, and institutional long funds flowed back in large numbers, amplifying the short-term upward momentum. In addition, global central banks continue to purchase gold, forming a solid bottom support. Multiple countries continue to increase their gold reserves, promote the diversification of foreign exchange reserves, hedge against geopolitical and exchange rate risks, and build a medium - to long-term foundation for gold prices.

The rapid rise in gold prices often implies the accumulation of risks. The biggest uncertainty in the current trend of gold prices still lies in the Federal Reserve's monetary policy. The core trading logic of this round of gold price strengthening is the weakening of the US economy and the end of the interest rate hike cycle, but there are still variables in the inflation trend. Once inflation rebounds beyond expectations again, the Federal Reserve will continue its high interest rate stance, and US bond yields will rise. The logic supporting gold prices will change, and gold prices may face a rapid pullback. In addition, the short-term rapid rise has accumulated considerable profit opportunities, and the technical risk of overbought is increasing. The pressure of technical correction cannot be ignored.

For gold prices, overseas speculative funds closely monitor changes in monetary policy, fast in and out, amplifying short-term market fluctuations; And central banks around the world are based on long-term strategies, laying out at low prices and steadily increasing their holdings. The game between two forces means that it is difficult for the gold price to break out of a unilateral trend, and high-level fluctuations and an overall shift in focus may become the norm in the future. In this context, ordinary investors should avoid blindly chasing high prices and must base themselves on their own risk tolerance to view gold price fluctuations from a long-term allocation perspective.

(Author: China Economic Net)