Fundamentals surrounding gold's high rise are undoubtedly key, but whether to chase or not is crucial

At present, the arrogance of the epidemic has not only failed to converge, but has even intensified. In order to cushion the sharp decline in the market, major central banks around the world have launched interest rate cuts, and Australia announced a rate cut this week25A basis point, the Federal Reserve urgently lowered interest rates on Tuesday night50One basis point, followed closely by Canada's interest rate cut50Following this, the United Arab Emirates, Malaysia, Hong Kong Monetary Authority and others have launched interest rate cuts, followed by several European and even global further rate cuts.

However, even so, monetary stimulus in the context of the epidemic cannot fully play its role. After all, as the market says, interest rate cuts are not vaccines, and they will not prevent the spread of the virus. The risk of further weakening global economic activity and supply chain disruptions is still increasing.

So, at least for now, let's go look for bearish newsgoldThe fundamental factors of gold are actually nitpicking, and from the perspective of fundamental logic alone, there is basically no suspense about the rise of gold. However, in front of traders, especially those in the leveraged market, as high as1650dollar/Should we pursue or not pursue the price of gold in ounces.

Liquidity shortage may lead to a repeat of gold price selling But I have to stop it

I believe everyone still vividly remembers the scene of a sudden and significant sell-off of gold last week, and there is no decent logic behind it. It is the lack of market liquidity, and investors have to sell their gold assets in exchange for cash to make up for the risk gap of other assets. However, this is just about10The decline in the US dollar, imagine if it weren't for last year12How many people can withstand such a deep decline in their gold holdings held during the month or even earlier.

Similar phenomena also occur in2008At that time, although the Federal Reserve repeatedly lowered interest rates, with the continuous decline of US stocks, scarce liquidity still caused gold to fall by nearly20%Although we have not yet been able to see anything like08The magnitude of the decline during the year has not been seen yet08The liquidity contraction during the year, but2019year9The sudden surge in overnight market dismantling interest rates in the United States has made it impossible for the market to believe that such events will not happen again, both psychologically and operationally.

The call for negative interest rates is soaring But can short-term interest rate cuts meet expectations?

Even if the Federal Reserve announces an emergency interest rate cut on Tuesday50However, the US stock market did not experience a corresponding rebound as a result, and fell again after a short-term rally. It can be said that the market has already digested the Federal Reserve50A slight interest rate cut is expected, and we look forward to further interest rate cuts in the future. Even the call for the Federal Reserve to enter negative interest rates in the future has been unprecedentedly high.

However, if that's the case, the real rise in gold may also come after the Federal Reserve's sustained interest rate cuts have truly come to fruition, and before that, investors may have more cash to cope with liquidity shortages and look forward to the day of market rescue; It is worth noting that the current US interest rate has reached1%-1.25%The ammunition on hand is already stretched thin, but in fact, the impact of the epidemic is still difficult to evaluate well. In this situation, the Federal Reserve's measures will become more cautious. In addition, although the epidemic is still in a spreading state, with the seasonal warming, the survival environment of the virus is damaged, which may become an important variable for the turnaround of epidemic prevention and control, and these may affect the pace of the Federal Reserve's interest rate cut. If the short-term interest rate cut expectation does not meet market expectations, it will undoubtedly undermine the enthusiasm of the bulls gathered in the gold market.

Overall, although from a fundamental perspective, the overall fundamentals all point towards bullish gold, and we also tend to continue to focus on the long-term allocation of gold assets, the factors mentioned above are risks that cannot be ignored by bullies. For traders in leveraged markets, they should pay more attention to trading risks during the period and avoid blindly chasing higher positions. The structural continuation of bulls may still depend on whether the closing price of this week can stabilize1655dollar/Ounces, otherwise there will still be gold pricesABCThe possibility of falling back.

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