Gold prices are surging again!

On March 5, the international gold price soared to over $2100 per ounce, leading to a dramatic rise in gold stocksAt the close, Zhongrun Resources hit the ceiling limit, Yulong shares increased nearly 7%, and Shandong Gold rose approximately 5%. The gold stock ETF registered a notable increase of 2.68%, the highest among all ETFs in the market.

The performance of gold in 2023 has been remarkable, and analysts are optimistic about the outlook for gold in 2024, especially amidst a declining interest rate cycle and ongoing global uncertainties.

On March 5, spot gold prices in London peaked at $2119.8 per ounce, marking the highest level in three months and inching closer to the historic high of $2146 per ounce set in early December of last year

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Overnight, COMEX gold futures also spiked to $2130 per ounceAnalysts attribute this surge to rising market expectations that the Federal Reserve may cut interest rates in June.

In the A-share market on March 5, gold stocks rose collectively, with Zhongrun Resources hitting the ceiling limit, Yulong shares climbing nearly 7%, and Shandong Gold increasing around 5%. Other companies like Sichuan Gold, Zijin Mining, Chifeng Jilong Gold, and Zhongjin Gold all saw rises exceeding 2%.

Additionally, the price of pure gold jewelry has also reached high levelsOn March 4, various gold jewelry brands reported gold prices exceeding 636 yuan per gramBy March 5, Chow Tai Fook's official website listed the price for pure gold ornaments at 645 yuan per gram.

Wang Xiang, manager of Bosera Gold ETF, suggested that the weak manufacturing PMI and University of Michigan consumer surveys released on the previous Friday drove market expectations for looser policies, significantly boosting gold prices, which are nearing breakthrough levels.

Furthermore, on March 5, China National Gold released its latest investor relations activity report, revealing that the company hosted research activities on February 27, 28, 29, and March 1. These attracted participation from several institutions, including Penghua Fund, Guojin Fund, and HSBC Jintrust, among others

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Since February, the company has conducted multiple investor interactions that have drawn significant interest.

Liu Tingyu, manager of Yongying Gold Stock ETF, stated that the stock prices of listed gold companies have shown a strong correlation with gold prices, although their fluctuations tend to be more pronounced than physical goldThis makes them a sort of "amplifier" for gold pricesBy the end of 2023, data indicated that gold stocks outperformed gold prices (Shanghai Gold) in various measures, providing significant excess returns attributable to increased production and the concentration of brand value in the gold jewelry sector.

On March 5, the gold stock ETF (517520) led the market with a 2.68% increase, ranking it the highest among all ETFs

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This ETF, established on October 24, 2023, reached a new net asset value at the latest closing.

Notably, as interest in gold investments rises, public funds are quickly launching related productsIn September of the previous year, several fund companies including Harvest Fund, GF Fund, and Cathay Fund submitted applications for ETFs related to the gold sectorAs of now, several significant ETFs focusing on gold mining and production have been established.

As of February 1, information on the official website showed that the Silverhua Fund and Huatai-PB had submitted applications for global gold mining ETFs, with confirmation of receipt on all related materialsThe indices for these initial funds include a selection of major gold mining companies from both domestic and international markets.

Additionally, gold-themed funds have shown impressive performance in attracting capital in 2023. Several gold ETFs reported significant increases in scale, with the Huatai Gold ETF achieving a scale of 14 billion yuan by the end of 2023, up 44% compared to the previous year

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Other funds like Guotai Gold ETF and KraneShares Shanghai Gold ETF also reported over 100% growth in scale.

Looking ahead to 2024, many institutions are expressing optimism regarding gold's performanceLiu Tingyu from Yongying believes both gold prices and stock market conditions will benefit gold stocks in the near termWith interest rate cuts on the horizon, there's potential for capital to flow into emerging markets, and a notable influx of northern capital into A-shares has already been observedWith supportive policies from China, the pace of economic recovery is expected to accelerate, leading to a rebound in corporate profitsThis favorable macro liquidity could maintain a stable credit environment, allowing for a positive outlook on the equity market.

The negative impact of high-interest rates on the US economy is becoming more evident, and US economic data is facing pressures leading to a downward cycle for US Treasury yields, which may provide mid-term support for gold prices

The January Federal Reserve meeting suggested the possibility of future rate cuts, signaling a potential driving force for gold to rise further.

Furthermore, factors such as central bank purchases of gold and strong consumer demand for gold are likely to catalyze price increases in the near futureTrends like de-dollarization and ongoing geopolitical risks further reinforce this positive outlook for gold.

Institutions such as the quantitative investment department at Hua’an Fund believe that the labor supply shortage is affecting the US job market, leading to consistent over-performance in job figures and contributing to rising wages and inflation.

However, with indicators like the PMI possibly weakening, there is a likelihood that gold prices may find support in the near future.

In summary, in light of the declining interest rate cycle and global uncertainties, institutions maintain a positive outlook on gold for 2024 due to several factors