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Tuchong Creative/Photos provided by Chen Shuyu/Table creation

Securities Times reporter Chen Shuyu

Last week, gold prices continued to rise overall, rising above $2,400 an ounce for the first time since May.

Since the beginning of this year, funds with gold (stocks) and silver as their main investment targets have continued to perform well. As of July 12, Hua Xia CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF rose by 36.86%, Guotou UBS Silver Futures rose by 31.95%, Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF rose by 28.52%, and E Fund Gold ETF, Bosera Gold ETF and others rose by more than 17%.

Wind data shows that as of the close of July 11 local time, COMEX gold futures and London gold spot prices both rose by more than 1% and stood above the $2,400 per ounce mark, hitting a new high in more than a month; the silver price rose more significantly, with COMEX silver futures and London silver spot prices both rising by more than 2%, with prices per ounce reported at $31.725 and $31.448 respectively. On July 12, the above gold and silver futures prices fell back, but were still at high levels.

Regarding the strong performance of the precious metals market, the market generally believes that it is mainly because the June CPI data released by the U.S. Bureau of Labor Statistics showed signs of continued slowdown in inflation.

As inflation data slowed down beyond expectations and combined with the recent dovish speech by the Federal Reserve Chairman, many public funds believe that expectations for a rate cut in September will further increase and prices of precious metals such as gold are expected to continue to rise.

Guotai Fund believes that in the current fundamentals, the medium-term Fed's general direction of maintaining looseness + the economy rolling down alternately will remain favorable to gold. In the long run, the US dollar credit system is challenged against the backdrop of excessive money supply and fiscal deficit monetization; coupled with the frequent global geopolitical turmoil that promotes asset reserve diversification, the demand for gold as a safe asset continues to increase. The global trend of "de-dollarization" makes gold likely to become a new round of pricing anchor, and precious metals are expected to have upward momentum.

Liu Tingyu, fund manager of Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETF, said that looking forward to the second half of the year, gold prices may still have room to rise. First, from a fundamental perspective, under the wave of global interest rate cuts, the downward trend of US inflation and the upward trend of unemployment are difficult to reverse in a high interest rate environment. If the Fed cuts interest rates in the future, it is expected to start a new round of gold price rises; at the same time, the upward debt of major countries in the world will drive the gold price to continue to rise. Secondly, from a trading perspective, the current largest gold ETF (SPDR) holdings and the most active gold futures (COMEX) non-commercial net long positions are far from historical highs (as of July 3, only 65% ​​and 70% of the highs of the past five years), which means that gold buyers still have a lot of room to increase their positions, and gold prices may not have peaked yet; the proportion of gold reserves in foreign exchange reserves of major gold-buying countries in the world still has a lot of room to increase compared with the global average. According to the latest survey of the World Gold Council, 69% of the central banks surveyed will increase their gold reserves in the next five years, which is more positive than the survey results of the past two years. Finally, from a geopolitical perspective, international geopolitical games are becoming increasingly fierce, and geopolitical disturbances in global election years may lead to a temporary increase in risk aversion sentiment.

In addition to gold and silver, copper and oil are also commodities that have received much attention this year. Many public funds believe that with the start of the Fed's interest rate cut cycle in the second half of the year, the dollar may fall and commodities may rise.

Zheng Zheng, General Manager and Investment Director of Multi-asset Management Department of Bosera Fund, said that the Fed's interest rate cut and geopolitical situation in the second half of the year will be two important catalysts for commodity prices. On the one hand, the market generally expects the Fed to adjust its monetary policy stance. If the interest rate cut is implemented, the replenishment of inventory in various industries in the United States will increase the demand for commodities, thereby raising commodity prices. On the other hand, changes in the geopolitical situation, such as the evolution of the conflict between Russia and Ukraine and the conflict in the Palestinian-Israeli region, may affect the supply chain and market sentiment of commodities. These two factors work together, and commodities have a certain space for investment value.

Shen Jing, manager of Morgan Stanley Resource Preferred Hybrid Fund, said that the supply constraints of industrial metals such as copper are the basis for supporting high prices, and the expectation of global economic recovery has pushed prices further up. Although copper prices are already at a relatively high level, it is expected that copper prices may still have room to rise in the medium and long term. From the perspective of financial attributes, the suppression factors of copper prices have eased during the period when the Fed's interest rate cut expectations have risen, laying the foundation for the rise at the beginning of the year, but the financial attributes of copper are a phased reason. From the perspective of commodity attributes, medium- and long-term supply and demand are still the decisive factors for copper prices. On the supply side, global copper capital expenditure peaked in 2013. Relatively low capital expenditures limit the release of new production capacity. At the same time, the grade of global copper mine reserves has also shown a downward trend, further constraining forward supply. According to the production data guidance of major global mining companies, annual copper production is expected to increase slightly, but actual production is often lower than expected due to some uncontrollable factors. On the demand side, the recovery of domestic demand, including the rapid growth of new energy vehicles, wind power and photovoltaics, as well as strong demand for electricity and air conditioning in traditional fields, have supported copper consumption. At the same time, the improvement of the global industrial economy, including the return of manufacturing to developed countries and infrastructure investment in emerging markets, has also opened up space for global consumer demand for copper.

Crude oil prices are greatly affected by geopolitical factors in the context of limited supply. OPEC+ continued to cut production in the second quarter, and supply tightened temporarily. At the same time, the uncertainty of geopolitical conflicts still exists, pushing up ICE Brent crude oil prices to $80-90 per barrel. The resilience of US economic data is strong, which supports crude oil consumption. As demand is about to enter the peak season, oil prices are expected to have strong support. It is necessary to observe the changes in geopolitical conflicts and whether OPEC+ will continue its production cut policy in the third quarter.