Nick Ku, senior financial analyst from Acetop Precious Metals Limited, has been invited to the gold trading challenge competition by Capital Weekly, the most influential financial and wealth management magazine in Hong Kong. He has been repeatedly breaking the records since the participation. His total return reached 21.5% in only three weeks, which is very impressive.

Nick Ku shared his investment experience with investors and forecasted the short-term trend of gold market.

Question: What data do you pay attention to when you make a trading strategy?

Nick Ku: I normally consult the following information：
1. Fundamental news on international politics and economy
2. Economic news and data, particularly data on the U.S., the European countries, and other regions. To a certain extent, these data affect the market trend. Acetop website also releases such data on our website for investors’ reference.
3. The gold ETF positions and price of gold futures can influence the price of the spot gold.
4. The supply and demand of physical gold is an important and fundamental factor that influences the gold price.
5. Technical analysis will be a useful tool for investors to find the optimal market timing. I suggest investors to learn more about skills of technical analysis techniques to improve their return on investment.
 

Question: There has been a gold-buying panic in Hong Kong in the last few months. For those customers who missed the chance, how long do they have to wait before the gold price falls again? And, how do you see the price trend in the gold market in May and June?

Nick Ku: A two-pronged strategy is essential in trend prediction where technical analysis plays a leading role supplemented by news analysis. In terms of news analysis, the tumble of gold price for this round has raised great concerns among investors. However, even the panic buying begins to taper off investors should be more rational.

According to the analysis of the historical data, there is an obvious negative correlation between the changes in the U.S. economic trend and the changes of gold price. Investors should pay attention to the changes of gold price before and after the release of some important data related to the U.S economy. Recently, the related data of the U.S. Economy is better than expected. . Therefore, the gold price will, to a certain extent, decreases for consolidation. Last month, the lower-than-expected non-farm unemployment rate also exerted a negative effect on the gold price. But the U.S. has repeatedly reaffirmed that it’s not just talk but they will continue to reduce the economic stimulus plans until the economy comes back to a healthy track.

From a macro perspective, if the U.S. economy continues to recover and begins a rapid growth after its doldrums, gold will, to a great extent, lose its risk avoidance function and be left neglected by investors. And one more thing here, investors should be aware of the rising gold price resulted from the increased mining cost so far this year. If the gold price sinks to its mining cost, the supply will also decrease rapidly. I personally believe that the gold price has little room to fall further and the recent price of US$1350 - US$1400 per ounce during a consolidation period is quite reasonable. If the same price level appears in May and June, investors may seize the opportunity.

Finally, I recommend investors to set a S/L price when investing in gold since risk management is an indispensable part of investment.