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China Fund News reporter Guo Wenjun

This week (July 15 to 19), gold prices rose first and then fell, with obvious fluctuations. On Tuesday, London spot gold once broke through $2,480/ounce, setting a new high, and then fell for three consecutive days from July 17 to July 19, barely holding the $2,400/ounce mark.

Since the beginning of 2024, the price of gold has risen by more than 16%, making it one of the best performing assets in the world this year. Will the bull market in gold continue? In this regard, Chinese and foreign institutions have made the latest judgment.

Structural bull market remains unchanged

Beware of technical pullbacks

JPMorganThe research report released stated that the structural bull market for gold remains unchanged.Gregory Shearer, head of base and precious metals strategy at JPMorgan Chase & Co.It is believed that the gold price trend will continue to rise in the next few quarters, with the average price expected to be US$2,500 per ounce in the fourth quarter of this year and reach US$2,600 per ounce in 2025.

Shiller said the forecast is based on JPMorgan's expectation that the Federal Reserve will enter a rate-cutting cycle starting in November 2024.The biggest risk to gold bulls is that the Federal Reserve suddenly and sharply turns hawkish in order to ensure that its inflation targets are achieved.

Huatai SecuritiesThe research report released stated that the two different transactions of "interest rate cut" and "Trump 2.0" are both beneficial to the performance of gold and some alternative assets. In the medium and long term, gold is still a good configuration that can "attack when advancing and defend when retreating, and has room for long-term development."

Wu Sten, investment manager of Puyi FundHe said that this year is a big year for geopolitics, and the second half of the year is still full of macro uncertainties. As a safe-haven asset, the allocation value of gold will continue to rise amid uncertainty.

Guantong Futures believes that gold has an upward drive.But it should be noted that gold is overbought in the short term, so be wary of technical pullbacksIn terms of operation, pay attention to the price support of London spot gold around US$2,390 per ounce.

Gold is seriously decoupled from the US dollar and US bonds

Based on past experience, a weaker dollar and lower U.S. Treasury yields tend to increase the attractiveness of non-interest-bearing gold.But Shiller found that since the beginning of 2022, gold has been seriously decoupled from the US dollar and US Treasury bonds.

"Gold's recovery came earlier than expected as it further decoupled from real yields," Shiller said. "We have been structurally bullish on gold since the fourth quarter of 2022. Gold prices broke through $2,400 an ounce in April 2024, and the rally came earlier and much more dramatically than expected. This was particularly surprising when the market was already trading in expectations of Fed rate cuts and U.S. real yields rose on stronger U.S. labor and inflation data."

US 10-year real Treasury yield and gold price

“Despite a stronger dollar and rising U.S. yields, real assets, including gold, are reaching new all-time highs driven by a host of structural bullish factors: concerns about the U.S. fiscal deficit, central banks buying gold for reserve diversification, inflation hedging and a deteriorating geopolitical landscape.”Natasha Kaneva, global head of commodities strategy at JPMorgan Chase"Any changes in any of the above factors will attract great attention from the precious metals market," he said.

Central bank gold reserves continue to rise

Shiller believes that central banks are the main factor driving higher gold prices in 2023, and this trend will continue in 2024.

Kavita Chacko, Head of India Research, World Gold CouncilAccording to the report, the Reserve Bank of India has been the main force in central bank gold purchases so far in 2024, and its gold purchases ranked second, second only to the Central Bank of Turkey (43 tons) and surpassing the Central Bank of China (28.9 tons). The Reserve Bank of India's gold purchases in the first half of 2024 totaled 37.1 tons, the highest since 2013, more than three times the amount in 2023, and exceeded the total purchases in the past two years.

Currently, the Reserve Bank of India's gold reserves have reached a record 840.7 tons, accounting for 8.7% of total foreign exchange reserves, significantly higher than 7.4% a year ago.

Reserve Bank of India gold reserves and monthly net purchases

Wu Sten said that the People's Bank of China had previously increased its gold reserves for 18 consecutive months until it stopped in May and June this year.

Physical gold holders are reluctant to sell

JPMorgan Chase's research report stated that economic and geopolitical uncertainties are often the driving factors for the rise in gold prices, because gold has a safe-haven function and is a very reliable hedging tool. In addition,Data shows that physical holders are reluctant to sell gold even if they see a sharp rise in prices.

ChacoIt was also found that there were not many sellers taking profits in the physical gold market as consumers expected gold prices to rise further.

ChacoShe said that the period from mid-May to July is usually a low season for jewelry purchases. Although seasonal factors and the continued rise in gold prices have suppressed the demand for gold jewelry, anecdotal research shows that the demand for gold bars and coins is growing steadily. She expects that with the start of the holiday season at the end of the third quarter, the demand for gold jewelry may recover.

Gold theme fundsThe average increase was over 16%

China Fund News reporter Zhang Yanbei

After the correction in June, gold prices have recently risen again, hitting a record high. Driven by this, the performance of funds investing in gold assets has clearly rebounded this year.

Wind data shows that as of July 19, all 33 gold-themed funds in the market (including commodity, index, and QDII, only the main code is counted) established before this year have achieved an annualized return rate of more than 13%, with an average net value increase of 16.47%.

in,Yongying CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock ETFWith a 28.11% increase, it ranked first. This gold stock ETF invests in listed companies in the gold industry chain, mainly gold mining companies and gold jewelry retailers. The share price of gold stocks is highly correlated with the gold price, but the elasticity of its rise and fall is higher than that of gold ETFs and physical gold, so it is called a "gold investment amplifier."

Following the gold stock ETF in terms of growth rate are several QDII gold funds. E Fund Gold Theme A, China Universal Gold and Precious Metals A, and Harvest Gold achieved annual returns of 18.89%, 18.57%, and 17.22%, respectively.

In addition, commodity ETFs and linked fund products investing in gold spot contracts are the most numerous, with yields ranging between 13% and 17%.

Gold is changing from a financial attribute to a monetary attribute

Fund managers believe that the recent surge in gold prices is the result of multiple factors.

Xu Chao, fund manager of Nanhua FundIt is believed that the recent short-term surge in gold prices is directly affected by risk aversion factors. Trump's attack has increased investors' risk aversion, and the market is betting that Trump's chances of winning have increased significantly. Trump emphasizes the conservative policy of "America First", and the characteristics of the policy combination are tax cuts at home and tariffs on foreign countries, which may increase the risk of future price increases, and the allocation value of gold as a safe-haven asset has increased.

Another fund manager added: "Fed officials have recently stated that the Fed may consider starting a monetary policy of lowering interest rates, which is directly beneficial to non-interest assets such as gold."

In the medium and long term,Liang Bosen, fund manager of Qianhai Kaiyuan FundThe biggest driver of this round of gold price rise is the correction of gold from financial attributes to monetary attributes. In the current controversial situation of the US dollar system, the purchase of gold as a reserve asset by central banks has greatly boosted the price of gold. The core logic of central banks buying gold is that the purchasing power of the US dollar has been greatly diluted in recent years, especially during the epidemic. The Federal Reserve printed a large amount of money, which was conducive to increasing market liquidity, but diluted the real value of the US dollar.

Gold prices are expected to fluctuate upward

Looking ahead, the fund managers interviewed believe that gold prices may fluctuate upward.

Talking about the driving factors for the future rise in gold prices, Xu Chao believes that first, the support of the gold purchase demand of central banks in various countries under the trend of de-dollarization, and second, the definite interest rate cut direction of the Federal Reserve's monetary policy will lead to an increase in the demand for gold investment. In addition, the risks of finance, politics, geopolitics and other situations under the reshaping of the world pattern are conducive to the increase in the demand for gold in asset allocation and risk aversion.

Zhang Yun, fund manager of Yongying FundHe also believes that the medium- and long-term upward logic of gold has not changed fundamentally. As the potential negative events of gold gradually come to fruition, the investment cost-effectiveness of gold and gold stocks after the correction has further improved, which deserves special attention. He added that from the perspective of trading, the current largest gold ETF (SPDR) holdings and the most active gold futures (COMEX) non-commercial net long positions are far from historical highs, which means that gold buyers still have a lot of room to increase their positions, and the gold price may not have peaked yet.

Liang Bosen said that mining costs also support gold prices. Since gold prices fluctuate greatly due to various data or events, he suggested that investors should not blindly chase high prices, but consider adopting a long-term fixed investment approach to diversify their allocations over time.

"Ordinary investors can hold gold as part of their asset portfolio for a long term at a certain fixed proportion. The holding ratio can be considered based on a comprehensive consideration of factors such as personal risk tolerance, market environment and investment objectives," said Xu Chao.

Editor: Xiaomo

Review: Xu Wen

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