Approaching $3000, gold suddenly plunges to a high level! What is going on? Goldman Sachs continues to be bullish, is this a good opportunity to buy low or a sign of impending collapse?

Just one step away from $3000, the price of gold turns around and plunges! What's going on? 01 Gold price plunges at a high level On February 25th, the spot price of gold surged to $2956 per ounce, but failed to sustain the momentum and started to trend downwards; On February 27th, international gold prices surged and became a hot topic, with spot gold falling by 1.33% and breaking below the $2900 per ounce mark; At the end of February, the price of gold closed at $2858.58 per ounce, with a decrease of 0.68%. In terms of news, Federal Reserve officials have taken a hawkish stance, with Mary Daly explicitly stating support for maintaining the current policy rate and not considering a rate hike in the current outlook. She pointed out that inflation expectations remain stable and that the balance sheet will continue to shrink in response to government fiscal challenges. She emphasized that balance sheet operations will serve as the primary tool for managing liquidity demand. Looking back at the trend of gold prices in the past decade (from 2015 to present), it has gone through five stages. From January to December 2015, there was a period of volatile decline, with COMEX gold prices falling to a low of $1045.4 per ounce; from January 2016 to October 2018, there was a period of bottoming out, with prices ranging from $1050 per ounce to $1368 per ounce; from November 2018 to August 2020, there was a significant increase, with COMEX gold prices rising by up to 73.6% to a high of $2089 per ounce; subsequently, from September 2020 to October 2022, the gold price continued to undergo high-level volatility adjustments; from November 2022 to the present, the gold price has seen a significant increase, continuously breaking through historical highs, with the highest increase reaching 84%. 02 Why is gold adjusting? Research from Cofco Futures shows that since February, gold prices have remained strong due to factors such as increased safe-haven demand caused by Trump's policy uncertainty, a rebound in the US dollar and US bond yields, and expectations of rising US inflation, leading to gold prices leading the gains among various assets, with varying degrees of increase in COMEX gold and SHFE gold. However, as the negotiation between Russia and Ukraine progresses and concerns about the weakening US economy grow, long positions take profits's off the table, causing a sharp decline in gold prices and giving back the post-holiday gains. Looking ahead, Cofco Futures believes that in the short term, the tightening of liquidity caused by factors such as the negotiation between Russia and Ukraine, tariff disturbances, and the decline in US stocks, as well as the rise in the US dollar, will weaken gold. However, in the medium to long term, global geopolitical risks and economic uncertainties will continue to support the price of gold. Investors need to focus on the progress of the negotiations between Russia and Ukraine, Trump's policy direction, and the Fed's March interest rate meeting. Huaxia Fund stated that the recent decline in gold prices is mainly due to four factors: the easing of geopolitical risks such as Russia and Ukraine; the recent hawkish signal released by the Federal Reserve, uncertainty in the rate cut path; some investors choosing to take profits at high levels, technical selling, as well as the decrease in COMEX gold replenishment and short-term premium factors. 03 Goldman Sachs expects gold prices to continue to rise this year On February 28th, Goldman Sachs released a research report stating that since the beginning of 2024, the price of gold has risen sharply by more than 40% and has repeatedly broken records. Goldman Sachs research department predicts that by the end of 2025, the price of gold will rise to $3100 per troy ounce, up from the previous forecast of $2890. Lena Thomas, an analyst at Goldman Sachs, wrote in the team's report that this upward revision of the gold price forecast is based on the higher-than-expected demand for gold from central banks worldwide. The report states that since the outbreak of the Russia-Ukraine conflict in 2022, the assets of the Russian central bank have been frozen, and central banks around the world have been increasing their gold reserves. Prior to this, the average monthly demand for institutional investors in the London OTC gold market was 17 tons. In December last year, this number reached 108 tons. In addition to the increase in central bank demand, the Goldman Sachs research department expects that as interest rates fall, making gold a more attractive investment choice, the increased purchases of gold exchange-traded open-end funds (ETFs) will further drive up the gold price. These factors may be partially offset by the behavior of speculators in the futures market reducing net long positions in gold, and the Goldman Sachs research department expects this to create some downward pressure on gold prices. Nevertheless, Thomas wrote: "If policy uncertainty, including concerns about tariffs, remains high and speculative positions remain at high levels for longer periods of time, then by the end of the year, the price of gold could be pushed up to $3300 per troy ounce." This article is reprinted from the WeChat public account "Snowball," translated and edited by Xu Wenqiang, GMTEight.