On Sunday (15 May) in Asia, there was a small rebound in paper gold, with a peak of 449.70 grams of paper-based gold prices as at the end of the week, with a sharp setback of 456 yuan renminbi on paper at the end of last week, with a minimum drop to 447 yuan renminbi, followed by a rebound to 450 junctions.

In the near future, the risk of United States debt default continues to increase. On 12 May, the National Assembly Budget Office (CBO) warned that if the parties did not agree on a debt ceiling, the United States would face a “high risk” in June.

On 11 May, the United States Minister of Finance, Yelren, who is participating in the G7 meeting in Japan, again urged Congress to agree on an enhanced debt ceiling.

It was also stated that, once defaulted, it would seriously undermine our credit ratings, trigger economic and financial disasters, seriously undermine the United States and the global economy and could weaken the United States’ global economic leadership.

According to the analysts, the warnings of Yerene do not appear to be dangerous. Yaros, Assistant Director of the credit rating agency, Mudi Research, expects that if United States debt default lasts for several weeks, it will result in a recession at the level of the financial crisis in 2008.

Hildebrand, Vice-President of the Beled Investment Management Company, warned at the New European Forum of the Economies of Pombo that “United States debt default would threaten the basic pillars of the global financial system and must not happen”.

At present, about 70 per cent of United States debt is held by the United States banking system and the remaining 30 per cent by overseas investors and central banks of other countries.

If the fall in United States debt prices triggers a slowdown, the shortage of United States debt buyers will result in a liquidity crisis that directly constrains the effectiveness of the United States reserves in implementing monetary policies and further complicates the efforts of global central banks to control inflation.

The decline in the attractiveness of the United States dollar as an asset for the global allocation of funds also has an impact on the attractiveness of the United States dollar assets, leading to a significant depreciation of the United States dollar, leading to fluctuations in exchange rates.

Hammack, Global Finance Manager of the High-Income Investment Bank, stated that “United States debt default will pose a risk to the position of the United States dollar as the world reserve currency.

Historically, too weak United States dollars will increase volatility in international commodity markets and boost prices for oil and other large commodities, especially gold.

Paper gold forward

Overall, the increased risk of default in the United States in early June and the impact of debt caps on financial markets will be exacerbated by the G7 Summit, which will strengthen sanctions against Russia and combat Russian energy and trade, which will provide a shield for paper-based gold movement, but the United States dollar has been overtified last week, the United States dollar has seen an increase in short-line signals, or will limit the growth of gold prices on short-lines and will remain alert to the risk of further reversal of paper-based gold prices until the United States dollar declines.

Finance Network

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