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Securities Times reporter Yu Shipeng

As global market volatility increases, gold has once again become the focus, with international gold futures prices once again breaking through $2,500 per ounce. Since March this year, gold futures prices have broken through multiple integer barriers.

As gold continues to maintain its strength, domestic related theme ETFs have also made significant floating profits. According to iFinD data from Tonghuashun, as of now, there are 14 gold-themed ETFs in the entire market. From the perspective of yields since the beginning of this year, ETFs that track gold stock-related indexes and ETF products that invest in gold spot contracts have achieved double-digit yields. Among them, the gold stock ETFs under China Asset Management and Yongying Fund track the CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock Index. As of August 14, the annual yields of China Asset Management Gold Stock ETF and Yongying Gold Stock ETF exceeded 20% and 15% respectively. In addition, the gold ETFs under public funds such as E Fund, Guotai Fund, and Bosera Fund that track the gold spot real contract Au99.99 have all achieved yields of more than 18% since the beginning of this year.

In the industry’s view, the recent rise in gold prices is not only related to the global liquidity fundamentals, but is also a dynamic manifestation of the gold supply and demand game.

Southern Fund said that after the US labor data on August 2 was significantly lower than expected, the gold price rose and fell, which may be related to the profit-taking of the "recession trade". However, the number of initial jobless claims in the United States released later was still lower than expected, confirming that although the US job market has weakened marginally, it has not yet reached a recession. Under the expectation of a "soft landing" of the US economy, the expectation of interest rate cuts may support the performance of gold, and the price of gold began to rise.

In addition, the increase in global central bank gold purchases is also a reason. Southern Fund said that the recent data released by the World Gold Council showed that global central banks purchased 183.39 tons of gold in the second quarter, a year-on-year increase of 5.6%, which supports gold bulls. "Global investors are closely watching the data of US PPI and CPI, which may be one of the important bases for the Fed to cut interest rates. Once the Fed's expectations of a rate cut strengthen, gold, as a non-interest-bearing asset, may receive a positive stimulus."

"In the past decade, gold has been an indispensable asset in asset allocation." Wells Fargo Fund believes that the correlation between gold and other assets is relatively low. In addition, with gold prices constantly hitting new highs, the cumulative increase in gold since 2016 has exceeded 137%. From the perspective of annual returns, gold assets embody the characteristics of "offensive and defensive". The U.S. money supply has been growing for a long time, the U.S. government leverage ratio has maintained an upward trend, and gold, as a local currency-denominated currency, has achieved a continuous upward shift in the price center. Since September 2022, the new background of anti-globalization, the decline in the credit of the U.S. dollar, and the frequent occurrence of geopolitical events has made the purchase of gold a "consistent behavior" of central banks and investors around the world.

Looking ahead to the market, Wells Fargo predicts that gold prices are likely to benefit from the interest rate cut cycle. Reviewing the five interest rate cut cycles of the Federal Reserve since 1990, gold prices rose in four of them. The average gold price rose by 11.2% in the five interest rate cut cycles, with the highest increase of nearly 30%. With the start of the Federal Reserve's interest rate cut cycle, a new round of gold prices may be starting.

Huaan Fund said that the recent US recession signal has strengthened, the PMI prosperity index and non-farm payroll data are both lower than expected, and inflation has clearly declined, which has strengthened the market's confidence in the Fed's interest rate cut in the second half of the year. In the long term, the global central bank's de-dollarization process is accelerating, and gold holdings are still replacing US dollar reserves. In addition, there is still uncertainty in geopolitical conflicts, and the value of gold allocation is prominent.

Xu Zhiyan, fund manager of Huaan Fund, believes that gold is in a very good allocation cycle in the next 3 to 5 years. One of the core reasons is that the Federal Reserve will be in a rate cut cycle in the next 3 years. This judgment is currently strengthened. After gold gradually reaches a new platform, it may consolidate for a period of time, investors gradually digest it, and the supply and demand in the market gradually reach a new balance. Gold is a dynamic pricing mechanism, which depends on the core logic: whether the currency is loose, whether the currency is over-issued, and whether the value of the currency can resist inflation in the medium and long term. However, Xu Zhiyan also reminded that from the current point of view, the transaction may be short-term, and the net long position of futures is indeed relatively high. After breaking through the $2,500 mark, the market may fluctuate.