Gold price hits a new record high! Hong Kong to establish an international gold trading center.
In recent years, the gold market has entered a significant super bull market phase under the combined influence of multiple factors.
Data shows that in the spot market, London gold has hit a new all-time high; in the futures market, New York gold futures have also surged to a historic high of $2,729.30 per ounce after a rapid rise.
Against the backdrop of soaring gold prices, gold stocks have also performed well.
On October 18, in the A-share market, $ZHONGJIN GOLD(600489.SH) rose nearly 5%, while $CHIFENG GOLD(600988.SH), Hunan Gold, and other gold stocks saw gains. In the Hong Kong stock market, $SD GOLD(01787.HK), $ZHAOJIN MINING(01818.HK), and $ZIJIN MINING(02899.HK) also experienced broad gains.
As of October 18, since the beginning of the year, Zhongjin Gold and Hunan Gold have seen cumulative stock price increases of over 50%, while Chifeng Gold, Shandong Gold, and other gold-related stocks have risen by more than 20%.
From a fundamental perspective, some gold stocks have released their performance forecasts for the first three quarters of 2024. Hunan Gold, Shanjin International, and Shandong Gold reported strong growth in net profit for the first three quarters, indicating an overall improvement in industry sentiment.
Hunan Gold's performance forecast shows that it expects to achieve a net profit attributable to shareholders of 657 million to 689 million yuan in the first three quarters, a year-on-year increase of 68.5% to 79.4%, mainly due to higher sales prices for gold, antimony, and tungsten products.
Regarding the future trend of gold prices, Kaiyuan Securities recently released a research report stating that the uncertainty surrounding the U.S. election and the Federal Reserve's interest rate cuts in the fourth quarter of 2024 may once again dominate commodity price fluctuations, with volatility in commodity prices likely to rise significantly. For precious metals, amid the chaos caused by uncertainty over overseas interest rate cuts in the fourth quarter, gold remains the preferred investment choice at this stage.
Donghai Futures believes that, from a macroeconomic perspective, the U.S. economy is experiencing a mild slowdown. Under the Federal Reserve's preventive rate cuts, a "soft landing" for the U.S. economy after the rate cuts could dampen further action by the Fed, leaving the bullish sentiment for precious metals not fully released. With strong demand for gold from central banks and financial institutions, coupled with domestic stimulus policies benefiting financial assets and related consumption, gold is expected to remain strong in the short term.
Soni Kumari, a commodity strategist at ANZ, stated that the factor that could change the trend of gold prices is the easing of U.S. monetary policy, as this would create conditions for investment demand. Uncertainty surrounding the U.S. election and geopolitical tensions will also support gold. During periods of low interest rates and geopolitical turmoil, gold is often the investment of choice.
Notably, on October 16, Hong Kong Chief Executive John Lee delivered the "2024 Policy Address," which highlighted gold-related content—a topic absent from the "2023 Policy Address."
Lee said, "Hong Kong ranks among the top globally in gold imports and exports. The current complex geopolitical landscape highlights Hong Kong's advantages as a safe and stable environment, attracting investors to store gold in Hong Kong and promoting gold trading, clearing, and settlement. We will leverage the mechanisms and infrastructure of an international financial center to build an international gold trading hub."
Specific measures include: 1) Attracting international gold spot storage in Hong Kong to promote trading, clearing, and settlement, and developing Hong Kong into a gold trading hub to drive related industries such as investment trading, derivatives, insurance, warehousing, trade, and logistics services. 2) The government will promote the construction of international-grade gold storage facilities to expand the storage and settlement of physical gold by users and investors, fostering derivative financial services such as collateral and lending, and creating new growth opportunities for the financial sector. 3) The Financial Services and the Treasury Bureau (FSTB) will establish a task force to advance the establishment of an international gold trading center, including strengthening trading mechanisms and regulatory frameworks, promoting the application of cutting-edge financial technology, and exploring the inclusion of gold products in the "Connect" program with the mainland.
Hong Kong Secretary for Financial Services and the Treasury Christopher Hui noted that the existing gold storage facilities in Hong Kong are nearly saturated, attributing the significant increase in gold demand in recent years to geopolitical factors. He hopes to elevate Hong Kong's gold trading market from a local to an international level. Hui stated that the FSTB aims to establish a task force by the end of the year to prepare for the specific direction and measures for building a gold trading market. The task force will include representatives from the government, regulatory bodies, market participants, and the entire gold industry value chain to comprehensively gather market information and feedback.
Author: Yunzhi Fengqi
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