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after the fed cut interest rates, the international gold price continued to break new historical highs. on the 23rd, the main contract of new york comex gold once surged to above $2,656/ounce, setting a new record high, and then suddenly fell sharply, causing market concerns. is the high gold price too cold? in fact, it is more that the bulls' faith is hard to change, and funds are still rushing into the market to increase their investment in gold products.

gold futures and spot spreads at high levels

on september 23, the international gold price suddenly fell sharply after hitting a record high. as of press time, the london spot gold price was around $2,616/ounce, and the new york comex gold futures december contract price was close to $2,641/ounce. the spread between london spot gold and comex gold main contract, that is, the spread between futures price and spot price, was as high as $25/ounce.

the price gap between futures and spot is an important indicator of investment enthusiasm. at the end of july this year, the price gap was close to $50 per ounce, setting a new high since march 2020. today, the price gap has not yet closed, and the net long position in the gold market continues to rise.

previously, in march 2020, due to the impact of the epidemic, there was a shortage of physical gold bars for delivery, which led to a round of "gold spot forced liquidation" market. the spread between futures and spot prices was as high as $75 per ounce, and gold shorts once cut their positions significantly. finally, it returned to normal after the exchange accepted remote settlement.

compared with the special situation of the global epidemic in march 2020, the international gold market now has strong investment demand and low gold output. the commodity futures trading commission (cftc)'s trading position report (cot) shows that comex gold net long positions increased by 25,900 lots to 252,600 lots in the week of september 17. among them, the long positions of managed funds reached 240,000 lots, an increase of 28,000 lots. the net long positions of managed funds representing market speculative demand have reached a high since 2020. the short positions represented by producers such as mines continued to hover around 90,000 lots, and only increased by 10,000 lots in the past three months.

gold etfs are favored by investors again

since the second half of the year, funds seem to have begun to favor gold etfs again. global gold etf products achieved a net inflow of us$2.1 billion in august. combined with the rise in gold prices, the overall scale of global gold etfs hit a new high at the end of august, reaching us$257 billion.

currently, the spdr gold etf (gld), a giant gold etf with a scale of nearly us$70 billion, has received net inflows for three consecutive months. in particular, in august, the global gold etf product holdings increased by 28.5 tons of gold in august, while north american funds increased their holdings by 17.2 tons of gold.

in the spot market, india's gold imports hit a record high of $10.06 billion in august. according to preliminary estimates by consulting firm metals focus, india's gold imports in august reached about 131 tons, the sixth highest import volume ever. in addition to ordinary consumers, the indian central bank has also been actively increasing its gold reserves. in the first seven months of this year, its reserves increased by 42 tons of gold, more than twice the amount purchased in 2023.

citigroup's latest report reiterated its bullish stance on gold. citigroup said that the sharp rebound in gold etf inflows, coupled with strong central bank demand, should push gold prices higher in the medium term.

compared with the international market, the domestic gold etf market has been differentiated, and different types of gold products have changed greatly. among them, gold products that track the spot price of gold on the shanghai gold exchange have all increased by more than 20%. the largest gold etf (518880) fund shares have continued to fall from the high of 4.79 billion shares in early august to 4.1 billion shares. other scale products have also seen a decline in shares.

the gold stock etf products that track the csi shanghai-shenzhen-hong kong gold industry stocks fell sharply after july, and then started to rebound, with the sector rebounding first. among them, the gold stock etf (159562), which has attracted much attention in the market, has been falling since reaching this year's high price on july 17. as of september 9 before the interest rate cut, it had fallen by more than 25%, showing a situation of stock price falling before the interest rate cut, but after the interest rate cut, the cumulative increase was nearly 10%, and the fund share continued to stabilize at a high level.

yan rong, an analyst at huaxi securities, believes that the reason for the preemptive decline before the rate cut is the early reaction of domestic investors to the decline in gold prices under the expectation of rate cut. however, the performance of gold prices since the rate cut on september 18 and the implicit logic support the continued high gold prices. the performance of gold prices after the rate cut and the preemptive decline of gold stocks show a large expectation gap, and the stock price is expected to rise to make a correction in valuation.

precious metals are still worth investing in

currently, investment banks such as ubs and goldman sachs have given a target price of $2,700, and more domestic and foreign hedge funds expect that it is only a matter of time before the price reaches the $3,000 mark.

zhao jiayu, an analyst at china merchants futures, believes that from the perspective of major allocations, precious metals are still worth allocating to hedge against currency credit risks. gold prices maintain a step-by-step upward trend, and the transition from volatility to rapid upward movement requires event-driven, so it is still recommended to allocate more on dips.

zhao jiayu said that the current anchor of precious metals is not the actual interest rate under the global quantitative easing system, but the monetary credit risk that the global quantitative easing system can no longer maintain, so the fundamental driving force of the rise has not changed. from past experience, interest rate cuts are often good for precious metals, but the impact on other varieties needs further observation.

li bin of huatai securities said that a review of the interest rate cut cycle since 1980 shows that the gold price is likely to continue to rise in the early stage of the interest rate cut cycle, and the longer-term trend of the gold price depends on the economic environment at that time. the current valuation level of gold stocks is far lower than the historical level of the same cycle. with the fed starting the interest rate cut cycle, domestic policy space is expected to open up simultaneously, and market risk appetite may gradually improve. "low valuation" + "market risk appetite rebounds", the cost-effectiveness of domestic gold stock allocation is still outstanding.