The A-share market witnessed a "resource divergence" scenario following the Dragon Boat Festival holiday.
On June 22nd, despite macro pressures from a hawkish shift by the Federal Reserve and rekindled rate hike expectations, the non-ferrous metals sector staged a strong rally. By midday, the CSI Industrial Non-ferrous Metals Index and the CSI Rare Metals Index both surged over 5%.
Stocks including Yunnan Chihong Zinc & Germanium Co Ltd (600497.SH), China Tungsten and Hightech Materials Co Ltd (000657.SZ), Yunnan Tin Co Ltd (000960.SZ), Jinduicheng Molybdenum Co Ltd (601958.SH), Xiamen Tungsten Co Ltd (600549.SH), and Ningxia Orient Tantalum Industry Co Ltd (000962.SZ) all hit their daily upside limits.
Gold, in stark contrast, remained lackluster, struggling around the $4,200 per ounce level. The main Shanghai gold futures contract fell over 3% intraday, while the main Shanghai silver futures contract plunged 6%. The precious metals theme in A-shares saw limited gains, with gold mining stocks generally rising only 1% to 2%.
An analyst noted that multiple macro headwinds are currently converging, suppressing the short-term price trajectory of precious metals. It was explained that earlier, influenced by the Middle East situation, the center of oil prices kept climbing, boosting market inflation expectations. With the European Central Bank officially restarting rate hikes and the Bank of Japan raising its policy rate to 1%, global liquidity has tightened marginally, creating systemic pressure on non-yielding assets like precious metals.
Regarding the influx of funds into the non-ferrous metals sector, an industry insider pointed to a "non-linear pull" from emerging industries like AI computing power and the new energy transition on key metals such as copper, tin, and rare earths on the demand side. On the macro front, the sector benefits from expectations of global liquidity easing and a long-term rise in resource security premiums amid geopolitical tensions. Supply-demand mismatches are reshaping the price floors for minor metals.
Industrial Narrative Drives the Rally
Looking at a longer timeframe, the launch of this minor metals rally was far from an overnight event.
Entering 2026, the minor metals sector continues to lead gains. Data shows that as of June 22, 2026, the CSI Rare Metals Theme Index has risen over 30% year-to-date, with a maximum gain of 149% since 2025. Analysis indicates that with the development of new quality productive forces and the arrival of the computing power capital cycle, the demand logic for minor metals has shifted from being driven by traditional industrial cycles to being driven by structural growth.
In terms of specific commodities, the price surges for tungsten, molybdenum, and germanium have been notable.
Throughout 2025, the domestic price of scheelite concentrate rose from 142,000 yuan per tonne to 456,000 yuan per tonne by year-end, a full-year increase of 221%. Entering 2026, tungsten prices continued their rapid ascent.
After breaking through 1 million yuan per tonne in mid-March and then retreating significantly, tungsten prices touched a yearly low of 406,000 yuan per tonne in May. Recently, a major producer's long-term contract price for 55% wolframite concentrate in the latter half of June was raised to 520,000 yuan per metric ton unit, up 15,000 yuan from the previous round, indicating price stabilization and recovery. One securities firm judges that tungsten's medium-to-long-term strategic status and shortage conditions remain unchanged, expecting tungsten prices to be in a mild uptrend overall in June.
Molybdenum has also performed strongly this year. Driven by the trend of "molybdenum replacing tungsten" in AI chips, molybdenum concentrate prices have risen steadily from 3,895 yuan per tonne-degree at the start of the year. According to data, the average price for 45% molybdenum concentrate reached 5,165 yuan per tonne-degree on June 18, a cumulative yearly increase of about 32%, having touched a high of 5,265 yuan per tonne-degree in mid-May. From an industry perspective, advanced AI manufacturing processes are increasing the usage of key materials. Recent industry developments, such as a major memory chip maker completing verification for production using molybdenum instead of tungsten, reinforce molybdenum's demand as a "semiconductor-grade high-purity strategic metal."
Regarding lithium, lithium carbonate futures prices have risen over 30% year-to-date amid favorable demand. One securities firm stated that the lithium battery sector will continue its inventory replenishment and price increase trend in 2026, with power battery inventories declining and energy storage inventories recovering. The industry as a whole is entering an active inventory replenishment stage, with resource prices like lithium carbonate and lithium hydroxide rising due to supply constraints.
Furthermore, another securities firm's view suggests that tungsten, germanium, gallium, and antimony, constrained by export controls and mining quota regulations, possess characteristics of supply rigidity and high geographical concentration as strategic metals. Their price floors and equity valuations are undergoing a systematic upward shift.
Gold's Gloom and a Major Price Cut
In sharp contrast to the fervor in industrial metals is the persistent weakness in gold.
During the Dragon Boat Festival holiday, international gold prices experienced a "frightening plunge," with COMEX gold falling sharply for three consecutive days, accumulating a drop exceeding 4%. On June 22nd, spot gold fell to as low as $4,136 per ounce intraday before rebounding slightly to around $4,196.
On the macro front, following the first FOMC meeting chaired by the new Federal Reserve Chair, the Fed maintained the federal funds rate at 3.5%-3.75%. However, the dot plot indicated a hawkish tilt towards rate hikes in 2026, with the new chair demonstrating resolve for Fed reform.
Analysis suggests the hawkish dot plot implies that if subsequent employment data remains robust and inflation stays elevated, the possibility of the Fed initiating preemptive rate hikes in the second half of the year increases. Markets are currently pricing in a cumulative 39 basis points of hikes for the second half of 2026. The institution judges that the Fed will likely keep rates unchanged before September, with the probability of a hike in December nearing 50%. The baseline scenario is for no rate hike in the second half of 2026, with possibly two cumulative hikes by the end of next year.
Since the outbreak of the US-Iran conflict, global inflation has trended upward, primarily due to a surge in transportation-related CPI linked to rising fuel prices.
A fund manager analyzed that the direction of US-Iran negotiations and the navigability of the Strait of Hormuz have been the main factors affecting gold's performance recently. The impact of this factor on the space for monetary easing, combined with the elevated oil price floor which has altered the operating range of US inflation indicators, along with a strong labor market, has essentially eliminated the possibility of monetary easing within the year.
A report from a research unit forecasts that global inflation will peak in the second quarter. "As Brent crude prices retreat, this trend will reverse in the coming months. This means the second quarter is likely the peak for global inflation." The report also emphasized that the decline in inflation will be a gradual process. Rising energy costs have led to soaring producer prices, with some of that pressure being passed on to consumers. Meanwhile, tariffs and the impact of the El Niño phenomenon on agricultural output will also intensify price pressures. The report forecasts global inflation to average 4.0% in 2026, higher than the 3.4% in 2025.
Institutional bullish stances on gold are also wavering. This week, Goldman Sachs sharply lowered its year-end 2026 gold price target from $5,400 per ounce to $4,900 per ounce, a reduction of $500. It characterized its near-term strategy as "tactically cautious" and warned that if rate hikes materialize, gold prices could fall further to $4,440 per ounce.
Goldman Sachs is not alone. Earlier, Citigroup also issued a research report warning, lowering its three-month gold price target from $4,300 per ounce to $4,000 per ounce.
However, Goldman Sachs also believes that short-term disturbances do not change gold's long-term trend. On one hand, central banks worldwide are still heavily allocating to gold; on the other hand, geopolitical tensions and regional conflicts will drive investors to increase the proportion of gold in their asset portfolios.
A market strategist stated that gold is not an asset that generates dividends or income. Perhaps investors are seeking other options, whether government bonds or other income-generating assets, given that interest rates are generally high. When high-yield alternatives exist, the appeal of gold diminishes. But overall, gold has been one of the best-performing assets over the past few years, and what we are seeing now might be a healthy reset.
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