Understanding the Market | Gold stocks continue to weaken, spot gold falls below $3,980, institutions expect consolidation and fluctuations before the end of the year
Gold stocks continue to weaken. As of the time of writing, LINGBAO GOLD fell 4.27% to HKD 15.9; PERSISTENCE RES fell 3.55% to HKD 1.36; CHI SILVER GP fell 3.23% to HKD 0.6; CHINAGOLDINTL fell 2.65% to HKD 125. On the news front, on November 4th, spot gold fell below USD 3,980 per ounce, down 0.53% for the day. This is a decline of over 9% from the peak on October 20th. GF Securities believes that the main reason for the deep correction in gold this time is that the implied volatility of gold is at a high level, and the demand for profit-taking after a significant rise may weaken the trend of capital inflow; the market has priced in too much geopolitical instability in advance, but there has been a recent trend of easing in China-U.S. relations and the Russia-Ukraine conflict. GF Securities points out that the short-term level of gold is still not low, and the volatility is large, with geopolitical risks marginally receding. If there are no unexpected positive factors to stimulate the market, it is expected that London gold will consolidate and fluctuate before the end of the year, and reach new highs after the first quarter of next year. For gold to continue rising, two necessary conditions must be met: (1) implied volatility must drop to the levels of August-September; (2) there must be new driving factors at the macro level
According to Zhitong Finance APP, gold stocks continue to weaken. As of the time of publication, Lingbao Gold (03330) is down 4.27%, trading at HKD 15.9; Persistence Resources (02489) is down 3.55%, trading at HKD 1.36; China Silver Group (00815) is down 3.23%, trading at HKD 0.6; China Gold International (02099) is down 2.65%, trading at HKD 125.
In terms of news, on November 4th, spot gold fell below USD 3,980 per ounce, down 0.53% for the day. This is a decline of over 9% from the peak on October 20th. GF Securities believes that the main reason for this round of deep correction in gold is that the implied volatility of gold is at a high level, and the demand for profit-taking after a significant rise may weaken the trend of capital inflow; the market has priced in too much geopolitical instability in advance, but the recent trends in China-U.S. relations and the Russia-Ukraine conflict have shown signs of easing.
GF Securities points out that the short-term levels for gold are still not low, and the volatility is significant, with geopolitical risks marginally receding. Unless there are unexpected bullish factors, it is expected that London gold will consolidate and fluctuate before the end of the year, and reach new highs after the first quarter of next year. For gold to continue rising, two necessary conditions must be met: (1) implied volatility must drop to the levels seen in August and September; (2) there must be new driving factors at the macro level
