Understanding the Market | Gold Stocks Lead the Gains as Powell Releases Dovish Remarks, International Gold Prices Significantly Rebound
Gold stocks saw significant gains, with TONGGUAN GOLD rising 4.03% and CHINAGOLDINTL rising 3.75%. The dovish remarks from Federal Reserve Chairman Jerome Powell and the unexpected decline in the U.S. April PPI have increased market expectations for interest rate cuts, supporting a rebound in gold prices. COMEX gold futures rose 1.74% to $3,243.90 per ounce. CITIC Futures pointed out that market concerns over the progress of the China-U.S. trade agreement and the U.S. hardline stance towards the EU have heightened economic uncertainty, driving funds into safe-haven assets like gold
According to Zhitong Finance APP, gold stocks are among the top gainers. As of the time of publication, TONGGUAN GOLD (00340) rose by 4.03%, trading at HKD 1.29; CHINAGOLDINTL (02099) increased by 3.75%, trading at HKD 54; Chifeng Jilong Gold Mining (06693) rose by 2.89%, trading at HKD 24.95; and Zhaojin Mining Industry (01818) increased by 2.06%, trading at HKD 17.84.
On the news front, the latest data shows that the U.S. PPI unexpectedly fell by 0.5% month-on-month in April, with service prices dropping by 0.7%, marking the largest monthly decline since 2009. Federal Reserve Chairman Jerome Powell stated that the Fed is adjusting its overall policy-making framework, and zero interest rates are no longer a baseline scenario. He emphasized the need to reconsider the language around labor market slack and average inflation rates, and projected that the April PCE would drop to 2.2%. The weakening inflation expectations will continue to enhance the prospects for interest rate cuts, which will support gold prices. Overnight, COMEX gold futures rose by 1.74%, trading at USD 3,243.90 per ounce.
CITIC Futures indicated that the U.S. April CPI fell short of expectations, leading to an increase in market rate cut expectations. The lack of substantial progress on the short-term tariffs of the China-U.S. trade agreement has raised doubts about the details of subsequent negotiations, resulting in some funds flowing into safe-haven assets like gold. Additionally, the U.S. hardline trade stance towards the EU has exacerbated economic uncertainty. Although the reduction of trade barriers between China and the U.S. has alleviated concerns about supply chain inflation, the inflationary risks from tariffs still support the long-term allocation value of gold
