Understanding the Market | Gold Stocks Continue to Rise, Central Bank Increases Gold Holdings for Six Consecutive Months, Institutions Predict Gold May Break Through Range in the Second Half of the Year
Gold stocks continue to rise, with LINGBAO GOLD up 3.98%, CHIFENG GOLD up 2.62%, SD GOLD up 1.24%, and ZHAOJIN MINING up 0.31%. Data from the central bank shows that gold reserves increased to 73.77 million ounces in April, marking six consecutive months of accumulation. Analysts believe that gold prices may break through the current range when the Federal Reserve cuts interest rates or when physical demand increases, and future attention should be paid to the trends in the U.S. economy
According to the Zhitong Finance APP, gold stocks continue to rise. As of the time of publication, Lingbao Gold (03330) is up 3.98%, trading at HKD 9.41; Chifeng Gold (06693) is up 2.62%, trading at HKD 29.35; Shandong Gold (01787) is up 1.24%, trading at HKD 24.55; Zhaojin Mining (01818) is up 0.31%, trading at HKD 19.32.
On the news front, on May 7th, according to the official reserve asset data disclosed by the central bank, China's gold reserves in April were 73.77 million ounces, an increase of 70,000 ounces from the previous month. This marks the People's Bank of China has increased its gold holdings for six consecutive months since November 2024, which is generally in line with market expectations. As of May 8th, during trading hours, the spot gold price has returned to the USD 3,400 per ounce level.
China Galaxy Securities released a research report stating that a breakthrough in gold's trading range may need to wait for the Federal Reserve to cut interest rates or for a surge in physical gold demand. Future observations of the U.S. economic situation are necessary, whether it is stagflation or recession. If stagflation occurs and the Federal Reserve does not cut interest rates, gold is likely to show a volatile upward trend. If a recession occurs, gold will follow other commodities in a correction until the Federal Reserve starts cutting interest rates. The trading range for gold has been systematically raised to USD 3,150 to USD 3,550, and after the Federal Reserve cuts interest rates, gold is expected to rise above USD 3,700. Additionally, strong demand for physical gold may lead to another upward movement in gold prices in the second half of the year.
Dongfang Jincheng's chief macro analyst believes that against the backdrop of a significant rise in international gold prices, which have reached historical highs, the recent continuous increase in gold holdings by the People's Bank of China is mainly due to new changes in the global political and economic situation following the new U.S. government's assumption of office. International gold prices may be difficult to decline for a considerable period. This means that the necessity to pause increasing gold holdings from a cost control perspective has decreased, while the demand to increase gold holdings from the perspective of optimizing international reserve structure has risen
