Analysts say the recent pullback in international gold prices is likely to give way to a continued uptrend in the mid to long term.
According to the financial investment industry on the 2nd, on the 31st, December delivery gold futures on the COMEX under the CME closed at $4,013.40 per ounce, down 0.06% from the previous session.
International gold prices hit a record high ($4,359.40) on a closing basis on Oct. 20 this year. But they began to fall sharply immediately afterward, dropping below the $4,000 level on the 28th, six trading days later. They have since inched up and continue to fluctuate around the low $4,010 per ounce level.
The revival of risk-off sentiment appears to be largely influenced by the U.S.-China summit. At the U.S.-China summit held on the 30th on the sidelines of the Asia-Pacific Economic Cooperation (APEC) leaders' meeting, the two countries produced a "tactical truce" level of agreement rather than the "big deal" the market had expected.
Ok Ji-hoe, an analyst at Samsung Securities, said, "With the trade war entering a truce phase for now, an immediate catastrophe was avoided, but tariffs negotiations between the two countries have not completely ended, and sensitive issues like semiconductors remain, so with assessments that the fuse is still alive, safe-haven assets rose."
However, the rebound appears to have been limited as expectations for a global liquidity rally weakened following hawkish (favoring monetary tightening) remarks by U.S. Federal Reserve (Fed) Chair Jerome Powell immediately after the Federal Open Market Committee (FOMC) meeting that ended on the 29th.
After deciding to cut the benchmark rate by 0.25 bp (1 bp = 0.01 percentage point), Powell said at a press conference, "An additional cut in Dec. is not a foregone conclusion."
In the securities industry, the mid- to long-term uptrend in gold was seen as intact. Sim Su-bin, an analyst at Kiwoom Securities, said, "It climbed so steeply recently that I think it just came down a bit. Overall, we see a high possibility that it will continue to rise in terms of trend."
Park Sang-hyun, an analyst at iM Securities, also said, "Although Powell said a few uncomfortable things, the very prospect that the rate-cut cycle could continue into early next year still enhances gold's appeal," adding, "In the long term, gold prices are positive."
There is also an interpretation that if a global liquidity expansion materializes, silver or stocks could be relatively more favorable for investment.
Choi Jin-young, an analyst at Daishin Securities Co., said, "Because they are more sensitive to liquidity than gold, in a liquidity party scenario, silver or stocks could have a much higher upside next year."