Gold prices hit a record high, Economic Daily： Gold investment should avoid blindly chasing high.

On March 21st, the spot price of gold in London hit a record high of $2,222.91 per ounce. Since the beginning of this year, the international gold price has been rising, but the high price seems to be unable to stop consumers’ enthusiasm for buying, and it has also ignited the gold accumulation business, which has a tendency of "the higher the price, the more I buy". So, is gold still suitable for buying at this stage?

To answer this question, we must first understand the reasons for this round of high international gold prices. Externally, factors such as the intensification of geopolitical conflicts and the continuous "gold buying fever" of many central banks have provided support for the rise in gold prices, but the core reason is the increase in the market’s expectation of the Fed’s interest rate cut.

In the international market, gold is denominated in dollars, so the direction of the Federal Reserve’s monetary policy has always been an important factor affecting the price of gold. Generally speaking, there is a "seesaw" relationship between the gold price and the dollar trend, that is, when the Fed raises interest rates to make the dollar strong, the gold price falls; Conversely, when the Federal Reserve cut interest rates and made the dollar weak, the price of gold rose. Since last year, against the background of falling inflation data in the United States, the Federal Reserve raised interest rates for the last time in July last year, and the market had already expected the shift of monetary policy. In addition, Federal Reserve Chairman Powell has publicly stated many times this year that it is expected to cut interest rates during the year, and the market’s expectation for the Fed to cut interest rates has further increased, which has continuously pushed up the price of gold.

It should be noted that expectations are only expectations after all. On March 20, local time in the United States, the Federal Reserve announced that it would keep the target range of the federal funds rate unchanged at 5.25% to 5.5%, and said that it was "inappropriate" to lower the target range of the federal funds rate until it had greater confidence in the inflation rate’s long-term goal of 2%. In the eyes of the industry, the Fed’s wavering attitude and this year’s US presidential election will bring more uncertainty to the market.

In the face of uncertain factors, whether to "get on the bus" or not, investors should act cautiously on the one hand, and look at the specific needs on the other. Gold has both monetary and commodity attributes. If there is consumer demand, especially for physical gold at weddings, Chinese New Year and other nodes, then buy it. After all, gold has many beautiful meanings in China, such as "love is stronger than gold" and "good fortune", which has become a consumer’s just need to some extent. At the same time, the weight of jewelry gold is relatively light, so consumers only need to live within their means, and do not have to worry too much about the time of purchase, so they can buy their favorite styles.

From the investment point of view, the more noisy the market is, the more investors need to think calmly. As a traditional safe-haven asset, the greatest value of gold lies in its anchoring value, which can be used as a part of its own diversified asset allocation to realize the dispersion of risks. It is obviously unreasonable and unrealistic to regard gold as the target that can make the value of assets grow rapidly. When dealing with gold investment, investors should accumulate a certain gold knowledge reserve, pay more attention to the macro-index changes that have an impact on the gold market, and form their own judgment logic for the future price trend. It is also necessary to understand the characteristics and risks of financial products such as physical gold, gold accumulation business and gold ETF, and determine the investment mode and allocation ratio of gold in the portfolio according to its own risk tolerance and investment objectives, and do not blindly pursue high investment.