The summer of 2026 sees the global capital markets engaged in a fierce contest between "safe-haven" and "greed," with the spotlight, unsurprisingly, falling on gold and related assets. It is noted that gold prices surged to unprecedented heights in the first half of the year, not only validating earlier market predictions of gold breaking through $3,000 or even higher levels but also cementing gold's status as the undisputed "hard currency" in global asset allocation. As July arrived, with subtle shifts in the geopolitical landscape, particularly signs of easing tensions in the U.S.-Iran conflict, the previously extreme safe-haven sentiment rapidly cooled, leading to a noticeable correction and volatility in gold prices at elevated levels.
In this roller-coaster market, the performance of gold stocks has been particularly noteworthy. As an industry bellwether, the positive profit alert for the first half of 2026 recently issued by Chifeng Gold (06693, 600988.SH) has undoubtedly injected a dose of confidence into the market.
The Certainty of Rising Volume and Price
In capital markets, earnings forecasts are often seen as a touchstone for stock prices. The core logic of Chifeng Gold's positive profit alert remains tied to the most fundamental driver of the gold industry: simultaneous increases in volume and price. According to the latest announcement, the company expects its net profit for the first half of the year to be between 1.7 billion and 1.78 billion yuan, representing year-on-year growth of 54% to 61%. The company attributes this impressive performance primarily to a significant year-on-year increase in gold prices, with the average selling price of gold rising by approximately 43%, coupled with the company's ongoing efforts to strengthen production organization and operational management.
From the perspective of "price," although gold prices have retreated recently, over a longer period, the average gold price for the first half of 2026 has remained within a historically high range. For mining companies, the marginal cost of gold extraction is relatively fixed, meaning that the excess profits generated by rising gold prices can almost entirely translate into net profit. With its industry-competitive cost control capabilities, Chifeng Gold's profit recovery in a period of high gold prices has far exceeded market expectations.
From the perspective of "volume," Chifeng Gold's "growth" label is becoming increasingly distinct. Whether through the expansion of overseas mines or deep exploration at domestic mines, the company is continuously fueling production growth. However, amid this generally positive trend, short-term earnings volatility should not be overlooked. Estimates suggest the company's second-quarter net profit is projected to be between 712 million and 792 million yuan, representing a quarter-on-quarter decline of 19% to 27% compared to the first quarter. This sequential decline objectively reflects the recent pressure on gold prices and the temporary drag on short-term profits from concentrated technical upgrades and maintenance at some mines. This is not a deterioration in the company's fundamentals but rather "short-term growing pains" within the production capacity release cycle. As subsequent technical upgrades are completed and overseas mine capacity steadily ramps up, the intrinsic value derived from production growth can still secure a definite increase in profitability. This is precisely the fundamental reason why the capital market maintains high interest in quality gold stocks in the current turbulent environment: seeking certainty of earnings growth in an uncertain macroeconomic landscape.
Safe Harbor Amidst Geopolitical Fog
Investing is never a linear, one-way street. Just as the market was filled with anticipation for gold's mid-year performance, a sudden geopolitical variable poured cold water on gold prices. Recently, signs of easing emerged in the closely watched U.S.-Iran conflict. This news acted like the first domino, quickly triggering a retreat in market safe-haven sentiment. As a traditional safe-haven asset, gold prices often have a positive correlation with geopolitical tension. When the clouds of war dissipate, capital rapidly withdraws from the gold market, flowing into riskier equity assets. Consequently, after a strong rally in the first half of the year, international gold prices have recently shown a clear pattern of peaking and retreating, with spot gold prices surrendering some of their year-to-date gains. This short-term volatility has led the market to question: Has gold's "crazy bull" run ended? Has the upward logic for gold stocks like Chifeng Gold fundamentally reversed?
In the face of market volatility, rational strategic judgment becomes particularly crucial. Although the easing of U.S.-Iran tensions has exerted downward pressure on gold prices in the short term, from a broader perspective, the underlying logic supporting the long-term rise in gold prices has not fundamentally shifted. First, the "gold-buying fever" among global central banks remains the most solid support for gold prices. According to World Gold Council data, the trend of global central banks increasing their gold reserves peaked in 2024, and this trend has not fundamentally changed in 2026. Central banks of emerging market countries, represented by China and Russia, continue to buy gold steadily and consistently for strategic considerations of foreign reserve diversification and de-dollarization. This rigid demand from official sectors provides a solid "floor" for gold prices. Research data indicates that global central banks have been continuously increasing their gold reserves in recent years, with purchases reaching 243.7 tonnes in the first quarter of 2026, and the Chinese central bank has been adding to its reserves for 20 consecutive months.
Second, U.S. debt issues and the weakening of the fiat currency system are the ultimate drivers of gold's long-term bull market. Regardless of the pace of the Federal Reserve's interest rate cuts, the massive U.S. debt scale and rising deficits continue to undermine the dollar's credibility. As noted, the global trend of seeking an alternative to the paper currency system and using gold as a reserve currency will not change. In this macroeconomic context, gold is not merely a commodity but an "ultimate currency" against fiat currency depreciation. Therefore, the recent gold price decline due to the easing of U.S.-Iran tensions should be viewed more as a "technical correction" rather than a "trend reversal." For companies like Chifeng Gold, short-term gold price fluctuations may affect market sentiment but will not alter the intrinsic value derived from their production growth.
Concluding Observations
Looking back from the midpoint of 2026, the gold market is at a critical stage of "separating the wheat from the chaff." As gold prices peak and retreat, the previous broad-based rally in the gold sector, where all boats rose with the tide, has likely ended, and the market is accelerating its return to rational pricing. As the tide recedes, the true test and opportunity arrive for those quality companies that genuinely rely on their own production growth to deliver profits. Chifeng Gold's impressive mid-year profit alert actually sends a clear signal to the market: under the "new normal" of high and volatile gold prices, companies with high-quality mine resources, capacity release potential, and excellent cost control can still navigate the cycle through strategies like "compensating for price with volume" or even achieving simultaneous growth in both volume and price.
For investors, facing gold price volatility caused by changes in the geopolitical situation, perhaps it is more appropriate to return to a rational asset allocation logic. As a "ballast stone" for hedging macroeconomic risks, gold's long-term value persists, but short-term price speculation will undoubtedly intensify. Against the backdrop of fading broad-based gains, market capital is likely to focus more intently on corporate fundamentals. In the future, mining companies with the ability to deliver on earnings and possess long-term growth potential may see opportunities for valuation reassessment, while those lacking fundamental support may face adjustment pressure. In this "midfield battle" for gold, the ultimate victors will be those who can anchor themselves more deeply and run farther amidst the waves.
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