On August 21, Caixin News Agency (Reporter: Liang Kezhi) With the Fed's rate cut becoming a foregone conclusion, coupled with geopolitical tensions, international gold prices have once again climbed to a historic high.

After breaking through the $2500 per ounce mark last week, as of 17:00 Beijing time on August 20, the spot gold price in London once rose above $2520 per ounce, reaching a new historical high, with a cumulative increase of nearly 3% for the month.

At 11:00 am on August 21, the US dollar index once probed below 101.3, close to a six-month low; London gold was reported at $2519 per ounce, having risen 22.14% since the beginning of the year.

At the same time, after the opening, gold stocks opened low and went high, with Chifeng Jilong Gold leading the way with a 4.69% increase, and SD Gold rose by 4.14%; the largest gold stock ETF (517520) in the industry rose sharply by 2.24% during the day, significantly higher than the concurrent gold price increase (AU9999 rose by 0.33%).

On August 21, Jingchuan, Chief Economist of East Asia Futures, told Caixin News Agency that the recent upward trend of gold in the short term is supported by geopolitical tensions, with safe-haven assets gaining popularity. In the medium to long term, global central banks are still buying gold as reserves; due to the weakening of the US dollar, the US CFTC's short position on commodities but remaining bullish on gold. Taking everything into account, it is highly likely that gold will break through its high point again in the short term.

In addition, Jingchuan pointed out that China's domestic gold did not reach its peak at the same time, and the analysis was that it was due to recent RMB appreciation hedging.

As of 15:00 on August 21, the onshore RMB/USD exchange rate was reported at 7.1317, close to the low point of 7.0920 on January 24th; the offshore RMB/USD rate was 7.1270, falling below the previous low point on January 24th. Wind data shows that the onshore and offshore RMB has surrendered its gains since the beginning of the year, rising by only 0.56% and 0.04% respectively.

The weakening trend of the US dollar has already taken shape. Will the gold price reach $3000 next year?

Caixin News reporters have noticed that mainstream institutions believe there is a close relationship and reverse interaction between the US dollar and gold. After experiencing a month of ups and downs, institutions have started to warn of short-term risks.

On August 21st, according to the latest report from Nomura Securities, the macro fund's position now indicates that a recession in the US economy is imminent. Combined with the largest long position held by commodity trading advisors, it indicates that the gold price may experience a decline. The relative strength index (RSI) of gold is approaching the overbought level of 70, which may lead to a potential technical correction.

Regarding the US dollar index, recently, strategists Masafumi Yamamoto and Masayoshi Mihara from Nomura Securities stated that the recent decline in the US Treasury yields and the US dollar exchange rate is somewhat excessive, considering the sluggish US economy and the low possibility of a significant rate cut by the Federal Reserve. After Federal Reserve Chairman Powell spoke at the Jackson Hole Symposium, there is room for the US dollar to be bought back.

However, in terms of the trend of gold, the medium-term outlook of institutions remains relatively optimistic.

Jingchuan believes that although some central banks have been selling gold, including the continuous suspension of gold purchases by the People's Bank of China for three consecutive months, the overall trend of global central banks buying gold remains net buying.

On August 19th, according to a report from Fortune Magazine, the US Commodity Exchange believes that if global geopolitical uncertainties intensify and central banks continue to buy gold, the international gold price may reach $3000 per ounce next year. According to JPMorgan's forecast, global central banks purchased over 1,000 tons of gold in 2023.

The renminbi exchange rate has quickly returned to the level at the beginning of the year, and whether it will continue to appreciate remains to be seen.

The RMB appreciation in this round began in late July. With the market's expectations of a rate cut by the Fed, an interest rate hike by the Bank of Japan, and increasing market volatility, there was a large-scale unwinding of carry trades globally. The onshore RMB exchange rate against the US dollar rose all the way from around 7.27 to stabilize near 7.13, appreciating by more than 1,000 points.

As of 15:00 on August 21, the onshore USD/CNY exchange rate was 7.1317, close to the low point of 7.0920 on January 24. The offshore RMB exchange rate was 7.1270, falling below the previous low on January 24. Wind data shows that the onshore and offshore RMB exchange rates have given back their gains since the beginning of the year, with only a 0.56% and 0.04% increase respectively.

On August 19, Nanhua Futures analyst Zhou Ji released a statement, stating that it is highly probable that the Fed will choose to cut interest rates in September, but further confirmation is still needed at this week's Jackson Hole Symposium. The spot exchange rate of the USD/CNY has fluctuated significantly and quickly reached its lowest point of the year. The settlement rate has increased and the pressure of net outflow of cross-border funds has eased. However, considering the weak domestic economy and exchange rate fundamentals, there are still differences between long and short positions. The exchange rate is expected to operate between 7.11 and 7.22 this week.

Regarding the next steps, Liu Lu, Chief Fixed Income Analyst at Ping An Securities, said on August 19 that the pulse of RMB appreciation brought by the unwinding of narrow carry trades has come to an end. On the one hand, the US economic growth rate is slowing down and the Fed has started to cut interest rates, so the degree of inversion of short-term interest rates between China and the US is expected to converge marginally. However, on the domestic side, leading financial indicators such as M1 growth, credit pulse, and price signals still need to be repaired.

Another variable is the tariff risk: if Trump takes office and imposes tariffs on China, expectations of RMB depreciation and the resurgence of carry trades may occur again.