(Yicai) Sept. 18 -- The gold price on the Shanghai Futures Exchange soared to a new record high last week because of seasonal factors and the depreciation of the Chinese yuan against the US dollar.
The price of most active gold contracts on the SFE has jumped up to 15 percent to CNY480.26 (USD66.24) per gram this year as of Sept. 15. Meanwhile, because of exchange rate factors, the US dollar-denominated spot gold price rose only 5.5 percent in the period.
The Chinese yuan has depreciated about 6.1 percent against the greenback from this year’s high, causing gold price in China to rise far more than on international markets, according to analysts. The high-demand season is also another factor affecting gold prices.
However, some analysts warned that gold is not a good speculative target in the short term.
The global demand for gold, including over-the-counter trading and flows of inventory, increased 7 percent to 1,255 tons in the second quarter from a year earlier, according to a report recently issued by the World Gold Council. In the first half, central banks of various countries bought 387 tons of gold, a record high.
The international gold price recently consolidated at USD1,930 per ounce. Gold price is likely to continue to fluctuate within a specific range near USD1,950 per ounce in the short term, Swiss investment bank UBS told Yicai, adding that the price of the gold metal usually rises before the United States starts easing its monetary policy.
With the significant slowdown of the US economy and inflation, the Federal Reserve will not continue rate hikes, Rob Subbaraman, head of global macro research at Nomura, recently told Yicai. However, the Fed will maintain a relatively high level of interest rates and hold a “wait-and-see” attitude in the near future, he added.
The Fed’s first interest rate cut is expected to occur after March next year.
For the medium and long term, most institutions still believe gold is a good asset for diversified allocation. UBS predicted that by the end of next June, gold price will be close to USD2,100 per ounce, suggesting investors prepare for a rise in gold prices in the upcoming 12 months.
Editor: Futura Costaglione