Why China loves gold and are buying plenty of it

LiveWire05-08

Up until a couple of weeks ago, the gold price was on a mighty tear in 2024, extending a rally that started in early October. There are several plausible theories for gold’s >30% gain since then, ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2433380796?lang=en_US&edition=fundamental","thumbnail":"","is_english":true,"pubTime":"2024-05-08 12:24","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2433380796","market":"us","top_or_hot":-1,"title":"Why China loves gold and are buying plenty of it","media":"LiveWire","content":"<div>\n<p>Up until a couple of weeks ago, the gold price was on a mighty tear in 2024, extending a rally that started in early October. There are several plausible theories for gold’s >30% gain since then, ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/why-china-loves-gold-and-are-buying-plenty-of-it\">Source Link</a>\n\n</div>\n","source":"livewire_stock","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Why China loves gold and are buying plenty of it</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nWhy China loves gold and are buying plenty of it\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-08 12:24 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.livewiremarkets.com/wires/why-china-loves-gold-and-are-buying-plenty-of-it><strong>LiveWire</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Up until a couple of weeks ago, the gold price was on a mighty tear in 2024, extending a rally that started in early October. There are several plausible theories for gold’s >30% gain since then, ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/why-china-loves-gold-and-are-buying-plenty-of-it\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7104","symbol_name":"黄金","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/why-china-loves-gold-and-are-buying-plenty-of-it","article_id":"2433380796","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/why-china-loves-gold-and-are-buying-plenty-of-it","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2433380796","pubTimestamp":1715142275,"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"Up until a couple of weeks ago, the gold price was on a mighty tear in 2024, extending a rally that started in early October. There are several plausible theories for gold’s >30% gain since then, including central bank buying due to de-dollarisation, slower than expected disinflation, and rising tensions in the Middle East.The gold price is up around 30% since early October last year. Whatever the reason, along with copper, gold has been one of the hottest investment themes tantalising Aussie investors this year. At its peak on 19 April, the S&P/ASX All Ordinaries Gold  sub-index had gained 32% in just 7 weeks – such is its sensitivity to the gold price.Best and worst ASX gold sector stocks since the peak in the gold price on 12 April . Morgan Stanley also notes strong physical demand from China, citing data from the China Gold Association that demand grew 6% p.a. in the first quarter of 2024. Much of the growth is due to buying by the People’s Bank of China , which has increased its o","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7104":"黄金","LU0971096721.USD":"富达环球金融服务 A","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","BK4581":"高盛持仓","BK4504":"桥水持仓","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","BK4127":"投资银行业与经纪业","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","BK7506":"金矿股","BK4585":"ETF&股票定投概念","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","BK4534":"瑞士信贷持仓","RSG.AU":"RESOLUTE MINING LIMITED","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","NST.AU":"NORTHERN STAR RESOURCES LTD","BK4588":"碎股","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","GOR.AU":"GOLD ROAD RESOURCES LTD","LU0106831901.USD":"贝莱德世界金融基金A2","EVN.AU":"EVOLUTION MINING LTD"},"translate_title":"为什么中国喜欢黄金并大量购买黄金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RSG.AU":1,"NST.AU":1,"EVN.AU":1,"GOR.AU":1},"content_text":"Up until a couple of weeks ago, the gold price was on a mighty tear in 2024, extending a rally that started in early October. There are several plausible theories for gold’s >30% gain since then, including central bank buying due to de-dollarisation, slower than expected disinflation, and rising tensions in the Middle East.\n\n\n\n\n\n\n\n\n\nThe gold price is up around 30% since early October last year\nWhatever the reason, along with copper, gold has been one of the hottest investment themes tantalising Aussie investors this year. At its peak on 19 April, the S&P/ASX All Ordinaries Gold (XGD) sub-index had gained 32% in just 7 weeks – such is its sensitivity to the gold price. \nBut this sensitivity cuts both ways, with the prices of many ASX gold stocks turning sharply south after gold’s recent pullback (March quarterly reports may also have had something to do with this). This leaves many Aussie investors who jumped on the run scratching their heads and wondering where to from here? \n\n\n\n\n\n\n\n\n\nBest and worst ASX gold sector stocks since the peak in the gold price on 12 April (note gold price pullback is 4.9%)\nLet’s try and answer that exact question! In this article I’ll explore some of the key fundamental drivers for the gold price. I’ll also check up on the latest broker research to highlight for you some of their top-rated ASX gold stocks. (Note, I also regularly publish technical analysis updates on the gold price in the Evening Wrap)\nQuite simply: Demand > Supply\nMajor broker Morgan Stanley cites three major reasons for gold’s immense strength in recent times:\n\n\nCentral Bank purchases: These have “often dictated the direction of gold prices regardless of macro signals”.\n\nSafe Haven / Geopolitical Risk demand: Often spiked by wars (e.g. as occurred during the Iraq war in 2002, Iran nuclear tensions in 2006, and the Russia-Ukraine conflict in 2022).\nSee below!\n“We think safe haven / inflation protection demand are playing a role”, says Morgan Stanley, who further notes, “rising Middle East tensions, the return of inflation concerns and a heavy election year are likely all contributing”.\nChina is the elephant in the room when it comes to gold\nThe third reason Morgan Stanley tips why gold is doing so well lately is to do with China. Rival broker Citi, agrees on this point, noting China is the world's largest consumer of gold, hoovering up around 60% of global mine production, and around two-thirds of all annual global gold supply.\nCiti says speculative interest in gold bullion is growing in China and this is combining with a strong physical demand outlook. Citi believes these factors are “buttressing” the gold market, and therefore are “supportive of a higher gold price floor”.\nMorgan Stanley also notes strong physical demand from China, citing data from the China Gold Association that demand grew 6% p.a. in the first quarter of 2024. Much of the growth is due to buying by the People’s Bank of China (PBoC), which has increased its official gold reserves for 17 consecutive months.\n\n\n\n\n\n\n\n\n\n17 consecutive months of Central Bank gold. Source Morgan Stanley, Bloomberg\nMorgan Stanley points out that China now has the seventh largest official gold reserves of any country, but at just 4.6% of total monetary reserves, it still has a long way to go to match other Western counties. To put this point into perspective, consider the average global central bank holds around 15% of reserves as gold, but this figure is as high as 70% in the USA.\nCiti also cites PBoC buying as one of the key reasons why the gold price should remain supported in the longer term. But also notes China’s current voracious appetite for gold is also due to:\n\nPent-up retail demand post-COVID\nInvestors using gold as a financial hedge against\nChinese New Year depreciation and weakness in other asset markets (e.g., local equities, and the property sector)\n\nGold price outlook\nWhile both brokers agree on the current strong demand environment for gold, they have quite different views on the outlook for the gold price. Citi notes it’s bullish on gold in the medium to long term, but in the short term, it suggests the gold price rally is potentially overextended.\n“We believe the elevated 1Q’24 buying pace is probably not sustainable”, says the broker. “Additionally, a seasonal pullback in regional demand is likely to hamper demand into the middle of this year.”\nLonger term, though, Citi are clear gold bulls. They tip the gold price could trade with a ‘3’ handle for the first time ever in the not-too-distant future, given their ‘base case’ is for gold to hit US$3,000/oz within the next 12-15 months.\nMorgan Stanley is a little more circumspect. Their ‘base case’ scenario is roughly where gold is now, around US$2,350/oz. But the broker notes there are plenty of factors both in play and that could develop (e.g. rate cuts, geopolitical tensions, sticky higher inflation), that mean the risk-reward for gold is “more skewed towards the bull case”. This means gold could tip US$2,760/oz in the second half.\nThe brokers’ top ASX gold stock picks\n\nEvolution Mining (ASX: EVN)\n\nBroker: Citi\n\nRating: Buy | Price Target: $4.50\nEVN is the broker’s preferred pick after assessing ASX gold sector’s March quarter results\n\n\nGolden Goad (ASX: GOR)\n\nBroker: Goldman Sachs\n\nRating: Buy | Price Target: $1.95\n“GOR remains undervalued in our view, trading at ~0.9x NAV (peer average ~1.3x)”\n“FCF yields of c. 5-10% in CY24-26E remain attractive vs. peers and support upside to the outlook for capital returns.”\n“Yield as well as organic growth”\n“History of value creation through exploration”\n\n\nNorthern Star (ASX: NST)\n\nBroker: Macquarie\n\nRating: OUTPERFORM | Price Target $17.00\n“NST retained FY24 sales guidance with commentary that suggests a solid end to the year is underway”\n\n\nResolute Mining (ASX: RSG)\n\nBroker: Macquarie\n\nRating: OUTPERFORM | Price Target: $$0.60\n“We (and management) remain confident in the planned performance lift over the year.”\n“Importantly, RSG is now fully unhedged and can begin to enjoy benefits of buoyant spot gold prices.”\n\n\nThis article first appeared on Market Index on Wednesday 8 May 2024.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.5","shortVersion":"4.22.5","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2433380796"}