Gold has experienced a rollercoaster performance this year. Data from Wind shows that in January, the spot price of London gold surged to a historic high of $5598.75 per ounce, only to drop to a low of $4098.25 per ounce by late March, representing a fluctuation range exceeding $1500. Since April, gold prices have generally shown a volatile upward trend, briefly recovering to $4748.61 per ounce during trading on May 11. As of now, the spot price of London gold hovers around the $4700 per ounce mark. Influenced by the volatility in international gold prices, the domestic gold market has also adjusted with significant price swings. Faced with this turbulent performance of gold assets, how are institutional players operating? What is their outlook for the future market, and how should portfolios be configured? Industry insiders have provided their insights.
Fund managers' operations show divergence, with profit-taking through reductions and strategic additions occurring simultaneously. In the first quarter, public fund managers displayed differentiated strategies in their handling of the gold sector. On one hand, some managers adhered to strict trading discipline, taking profits by reducing their positions in gold-related stocks. Data from Tianxiang Investment Consulting indicates that in Q1, Zijin Mining Group ranked second on the list of stocks most reduced by public funds. The total market value held by funds dropped from 390.81 billion yuan in Q4 2025 to 245.42 billion yuan, with 226 funds no longer heavily invested in the stock. Furthermore, 18 funds ceased heavy holdings in Shandong Gold Mining, and 6 funds did the same for Hunan Gold Group. Specifically, fund manager Wang Ligang from Yinhua Fund reduced holdings of gold stocks within his portfolio. Wang stated in the quarterly report that this was a profit-taking and position-reducing operation during a time when the gold sector was highly popular. However, he emphasized that after experiencing wide fluctuations and short-term market noise, the gold sector remains the most promising and heavily weighted direction for their medium to long-term strategy. Zhang Zhenqi, a fund manager at E Fund Management, also slightly reduced gold holdings in Q1, citing comprehensive considerations of marginal changes in capital flows and market trading congestion.
Concurrently, a group of fund managers chose to increase their holdings of gold stocks against the trend in Q1. Data from Tianxiang shows that Chifeng Jilong Gold Mining became one of the top 50 stocks increased by public funds in Q1. The total market value held by funds rose from 2.824 billion yuan in Q4 2025 to 6.471 billion yuan, with 48 new funds adding it to their core holdings. Among them, fund manager Sheng Fengyan from Western Lead Fund was notably active. Compared to the end of 2025, he significantly increased holdings in Shandong Gold Mining, Shanjin International, Zijin Mining Group, Zhongjin Gold, and Chifeng Jilong Gold Mining, while newly adding Western Region Gold and Zhaojin Mining to the core holdings. Sheng pointed out in the quarterly report that the importance of precious metals and strategic materials is expected to rise systematically, and gold remains an asset worthy of focused attention. Additionally, fund manager Han Chuang from Dacheng Fund continued to increase holdings in Zhaojin Mining in Q1, marking a consecutive increase since Q3 2025. Fund manager Li You from Chuangjin Hexin Fund substantially increased holdings in Shandong Gold Mining in Q1, with Zhongjin Gold and Hunan Gold Group newly entering the top ten holdings, while slightly increasing holdings in Zijin Mining Group.
From an institutional perspective, short-term pressure coexists with solid medium-term supportive logic in the current gold market. The macro team at Zhongtai Securities analyzes that the short-term pressures on gold primarily include: first, under extreme risk sentiment, institutions are forced to liquidate liquid assets, with liquidity shocks somewhat suppressing safe-haven buying; second, the market is repricing expectations for a narrowed scope of Federal Reserve interest rate cuts. However, the medium-term supportive factors for gold have not dissipated. Data shows that the People's Bank of China recently announced that as of the end of April, the central bank's gold reserves stood at 74.64 million ounces, an increase of 260,000 ounces month-on-month, marking the 18th consecutive month of increases. Coupled with the outstanding performance of Chinese gold ETFs, which continue to see net capital inflows, and robust domestic physical demand at the beginning of the year, support remains. UBS Investment Bank believes that from a medium to long-term perspective, the upside potential for gold prices is strengthening. The factors supporting gold price increases remain unchanged, with growth in both personal and official demand continuing to solidify the upward trend. Gold is gradually becoming a core allocation in investment portfolios. The institution expects gold prices to reach new highs in 2026 and suggests that any pullback to around $4000 per ounce should be seen as a good opportunity to accumulate gold positions. Furthermore, Morgan Stanley maintained its forecast for a gold price of $5200 per ounce by the end of 2026 in a recent report, stating that the core drivers of international gold prices have shifted from safe-haven demand to Federal Reserve monetary policy and the trajectory of real yields.
When choosing between gold stocks and gold futures or spot prices, although their long-term trends and magnitudes are nearly similar, they are not synchronous. Zheshang Securities Asset Management points out that the lack of synchronization is mainly due to three reasons. First, futures are purely price-driven, while stock prices result from a combination of price, earnings, valuation, and sentiment. Second, increases in gold prices need to translate into net profit through quarterly reports, and the market requires time to verify earnings elasticity, leading to a certain lag. Finally, systematic factors in the A-share market, such as overall market style, sector rotation, and capital preferences, can temporarily suppress the transmission of gold prices to stock prices. Therefore, regarding specific investment strategies, the industry offers multi-layered allocation suggestions. Huafu Fund recommends two allocation approaches: first, focus on the allocation value of physical gold; second, pay more attention to the long-term allocation opportunities in gold mining enterprises. Against the backdrop of high gold prices, related companies will not only see rapid release of profit elasticity but also continuous revaluation of mineral resources. For those bullish on gold long-term, fund products focused on gold stocks may be a good choice. Considering that gold stocks exhibit greater volatility, it is advisable to adopt an asset allocation mindset for positioning or use regular investment plans to diversify risks. Wu Guoqing, a fund manager at Qianhai Kaiyuan Fund, stated that the current A-share gold sector possesses clear allocation value, with the core logic lying in the dual advantages of "high gold prices and low valuations." Based on current gold price estimates, the dynamic P/E ratios for 2025 of major A-share gold companies are generally below 20 times, with forward P/E ratios for 2026 below 15 times. Against the backdrop of a systematically rising gold price center, this valuation level does not fully reflect the companies' profit improvements and resource value revaluation. For allocation strategy, it is recommended to "actively allocate and select leading companies." Utilize market volatility to select companies with low reserve valuations, clear future volume growth, and outstanding cost advantages.
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