According to Zhitong Finance APP, the Southbound 2x Long Gold ETF (07299) fell more than 4%, down 3.78% as of press time to HK$21.88, with turnover of HK$18.9736 million.
On the news front, as of September 28, spot gold continued to decline, with intraday losses widening to more than 2%, falling below the US$4,200 mark. According to Chicago Mercantile Exchange (CME) data, market expectations for a 25 basis point rate hike by the Federal Reserve in October once rose to 64.8%. Institutional analysis clearly pointed out that the surge in the U.S. 10-year yield above 5% is the main reason for the pressure on zero-yield assets such as gold.
Nanhua Futures believes that in the medium term, the valuation-side pressure on precious metals has been largely released, and the low point for the year may have already formed. The previous pullback in precious metals had already priced in a relatively hawkish expectation of 2.5 rate hikes by the Federal Reserve through mid-next year. Under the current more hawkish pricing of rate hike expectations, gold and silver have shown clear resilience, supported on one hand by central bank gold purchases, and on the other hand by investment demand not seeing another significant outflow.
Overall, rate hike expectation trading has become crowded, and the subsequent upside inflation risk mainly comes from geopolitically driven oil prices. The expected downward pressure on gold is limited, and short-term pullbacks can still be viewed as buying opportunities on dips.
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