Understanding the Market | Most gold stocks rose, spot gold once broke through 4200 USD, institutions are optimistic about the sector welcoming a double hit of valuation and profit
Affected by the weak U.S. non-farm payroll data and the decline in oil prices easing inflation concerns, the Federal Reserve's interest rate hike expectations have contracted, and spot gold once broke through USD 4,200. Against this backdrop, gold stocks such as Zijin Mining and SD GOLD mostly rose. CITIC Securities believes that gold stocks currently have a margin of safety, and it is expected that gold prices are likely to return to high levels, presenting a configuration opportunity for a double hit in valuation and earnings for the sector
According to Zhitong Finance APP, most gold stocks have risen. As of the time of publication, Zijin Gold International (02259) is up 3.63%, trading at HKD 111.4; Shandong Gold (01787) is up 3.86%, trading at HKD 20.44; China Gold International (02099) is up 3.56%, trading at HKD 148.5; Zijin Mining (02899) is up 2.99%, trading at HKD 31.64.
On the news front, on July 6, spot gold surged at the beginning of trading, briefly breaking through USD 4,200. Last week, data released by the U.S. Bureau of Labor Statistics showed that non-farm payrolls increased by only 57,000 in June, about half of the market expectation of 113,000, indicating a weak labor market that significantly reduced expectations for Federal Reserve interest rate hikes. Additionally, the continuous decline in international oil prices has alleviated market concerns about rising inflation risks. It is reported that OPEC+ has agreed to increase production quotas by 188,000 barrels per day in August.
CITIC Securities believes that gold prices and gold stocks have severely overshot since the U.S.-Iran conflict, and currently, gold stocks have a strong safety margin in terms of PE and resource valuation. The firm expects gold prices to range between USD 4,000 and USD 4,500 per ounce in Q3 2026. If interest rate hike expectations are fully corrected, gold prices are likely to return to USD 4,500 to USD 5,000 per ounce. The gold sector will benefit from the resonance repair of profit expectations and valuation levels. Emphasize the comprehensive allocation opportunities in the gold sector
