Recently, there has been an increase in demand for gold as a safe-haven asset. After experiencing a significant drop during the National Day holiday, the price of gold has rebounded in a “V-shaped” trend, showing a clear roller coaster pattern. Industry insiders believe that the increase in international uncertainties has highlighted the safe-haven nature of gold. Due to the drastic fluctuations in gold prices, individual investors should carefully select gold varieties and avoid blindly chasing trends.
As of October 17th, the COMEX gold price was $1936.7 per ounce, a slight increase of 0.02% from the previous trading day. The domestic basic gold price was reported at 462.60 yuan per gram. The prices of major gold jewelry brands remained relatively stable, with Chow Sang Sang offering 599 yuan per gram, Chow Tai Fook at 600 yuan per gram, and Caibai Jewelry at 588 yuan per gram.
In recent times, the price of gold has entered a volatile phase. In mid-September, the domestic gold price briefly exceeded 470 yuan per gram, and the prices of some brand stores even rose to around 620 yuan per gram. According to Wind data, on September 18th, the COMEX gold closed at $1955.2 per ounce, after which it entered a phase of volatile decline. From September 25th to October 5th, the COMEX gold experienced a continuous decline for 9 days, reaching its recent lowest point at $1834.3 per ounce, with a cumulative decline of 6%. The domestic gold price also continued to fall, reaching 446 yuan per gram on October 6th, a decrease of about 5% from the mid-September high. However, starting from October 6th, the market trend reversed again, with the COMEX gold experiencing a “V-shaped” rebound. As of October 13th, it once again rose above the “1900” mark, reaching $1928.5 per ounce, a daily increase of 3.32%.
Industry insiders believe that there is currently increased global uncertainty in the world, highlighting the safe-haven nature of gold. With the possibility of the US ending or reducing interest rates in the future, the expectation for rate cuts is gradually increasing, which will further enhance the overall performance of precious metals. In addition, industry insiders advise that gold assets can hedge against tail risks and have long-term allocation value. Individual investors should carefully select gold varieties and avoid blindly chasing trends.
From the perspective of listed companies, the performance of gold-related companies has been notable due to the rise in gold prices. In terms of third-quarter performance forecasts, some companies, represented by Shandong Gold, are expected to double their net profits. Shandong Gold is expected to achieve a net profit attributable to shareholders of the parent company of 1.2 billion to 1.4 billion yuan for the first three quarters of 2023, an increase of 507 million to 707 million yuan compared to the same period last year, a year-on-year increase of 73.17% to 102.03%. During the reporting period, the company steadily promoted the construction of intelligent mines, improved production and resource utilization rates, tapped into potential cost reductions at various stages of production and operation, and improved operational efficiency. At the same time, the company further strengthened its research and analysis team, conducted market tracking research, comprehensively improved its price judgment capabilities, grasped price trends, and made full use of high gold prices, achieving gold sales prices higher than the same period last year.
From the perspective of semi-annual reports, among the 11 disclosed reports of gold-related listed companies, 7 companies achieved year-on-year growth in net profits attributable to the shareholders of the listed companies. Shandong Gold, Yin Tai Gold, and Zhongjin Gold were among the companies with the highest growth rates in net profits for the first half of 2023.
In the semi-annual reports, relevant listed companies mentioned that according to statistics from the China Gold Association, China’s raw gold production in the first half of 2023 was 178.598 tons, an increase of 3.911 tons compared to the same period last year, a year-on-year increase of 2.24%. Among them, gold mining produced 139.971 tons, and by-product gold from non-ferrous metals produced 38.627 tons. In addition, the import of raw gold produced 65.397 tons, a year-on-year increase of 17.5%. If this part of the imported gold is added, the total gold production in the country reached 243.996 tons, a year-on-year increase of 5.93%. In the first half of 2023, the national gold consumption was 554.88 tons, a year-on-year increase of 16.37%. Among them, gold jewelry consumption was 368.26 tons, a year-on-year increase of 14.82%; gold bars and gold coins were 146.31 tons, a year-on-year increase of 30.12%; industrial and other gold usage was 40.31 tons, a year-on-year decrease of 7.65%.
Looking ahead, the non-ferrous metals team at Debon Securities believes that the increase in international uncertainties highlights the safe-haven nature of gold. In addition, if the possibility of US interest rate hikes ends and expectations for rate cuts continue to rise, the decrease in real interest rates will highlight the allocation value of gold. Furthermore, with economic recovery and the continuous growth of the new energy industry, the overall performance of precious metals may further improve in the market. It is recommended to pay attention to gold and silver-related targets.
Many industry experts remind investors that gold assets have a lower correlation with traditional stock and bond assets in terms of risk and return characteristics. They can be used to hedge against tail risks in an asset portfolio and have long-term allocation value. It is advisable to allocate gold assets appropriately in a portfolio, such as paper gold from commercial banks, gold ETFs in the fund market, and shares of gold-related listed companies in the securities market. However, jewelry gold with high craftsmanship and brand premium is not suitable as an investment commodity.
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