SDIC Securities has released a research report stating that rate hike expectations have been fully priced in, and the short-term bearish factors weighing on gold have largely been exhausted.
Recently, expectations for Federal Reserve rate hikes have continued to strengthen, and the market has already priced in a relatively hawkish scenario quite thoroughly. Gold prices may have already reflected the most pessimistic short-term expectations. As the negative factors are gradually absorbed, a bottom range for gold prices may have formed around $3,900 to $4,200 per ounce.
Falling US Bond Yields Are Pricing In a Recession, Opening Room for Future Rate Cuts
From the perspective of forward rate pricing on 10-year US Treasury bonds, the market has begun to reflect expectations of future economic recession and declining interest rates. Rate hikes represent a short-term disturbance, while the pressures of economic recession will constrain the scope for sustained monetary tightening. After 2028, the Federal Reserve is expected to restart its rate-cutting cycle, and the medium-to-long-term upward momentum for gold remains ample.
Central Bank Gold Purchases Combined with Sustained ETF Inflows Continue to Reinforce the Long-Term Allocation Case for Gold
Dollar credit and US Treasury credit may weaken over the long term. China's central bank increased its gold holdings by approximately 23 tonnes in September, marking 23 consecutive months of accumulation. Cumulative purchases in the third quarter reached 63 tonnes, a quarterly high not seen in nearly three years. Global gold ETFs recorded net inflows of approximately $10 billion in September, with cumulative net inflows of $31 billion in the third quarter, pushing holdings to a record high. Notably, despite gold prices falling 8.5% in September, global gold ETF holdings still increased against the trend by 67 tonnes to a record high of 4,256 tonnes.
Stocks to Watch
Investors may pay attention to Chifeng Gold, Shanjin International Gold, China National Gold Group Gold Jewellery, Shandong Gold, Hunan Gold, and Wanguo Gold Group. Hong Kong-listed names to watch include Lingbao Gold and Zijin Gold International.
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