Denong Securities: New growth opportunities open up, rate cuts expected to continue to boost gold prices

According to the Zhitong Finance and Economics APP, Debon Securities released a research report stating that with the recent Fed rate cut in place, if there are no new catalysts in the short term, the price of gold is expected to fluctuate around $2600 per ounce. Historically, during rate cut cycles, the price of gold tends to rise. Based on calculations, understanding from the perspective of zero-interest bonds, and deducing from the monthly changes in gold prices and actual interest rates from February 2000 to June 2024: the average modified duration of gold is 56, and the average convexity is 88033; the results of the second regression are y=0+(-11.4251)*x^1+(14.3731)*x^2. These parameters can provide some reference for the extent of changes in gold prices with future rate cuts, potentially opening up new upward space for gold.

50bp Rate Cut Exceeds Market Expectations, Future Expectations Expand

From the current rate cut situation, this 50bp rate cut exceeds market expectations. At the same time, the Fed's statement shows increased confidence in inflation, moving steadily towards 2%, and the Fed has lowered its 2024 US GDP growth forecast to 2.0%; lowered the 2024 US core PCE inflation forecast to 2.6%; raised the 2024 US unemployment rate forecast to 4.4%. Looking at future rate cut expectations, Fed policymakers expect the federal funds rate to be 4.4% by the end of 2024, previously estimated at 5.1% in June; expected to be 3.4% by the end of 2025, previously estimated at 4.1% in June; expected to be 2.9% by the end of 2026 and 2027, previously estimated at 3.1% and 2.8% respectively in June.

Gold Price Touches $2600 as Expected, Awaiting Emotional Adjustment

Debon Securities stated that the Fed rate cut marks the beginning of a change in US monetary policy. With the Fed rate cut in place, the price of gold may converge towards $2600. However, from the market performance perspective, the London gold price quickly fell back after reaching $2600, trading at around $2560 per ounce as of the 19th, bringing some selling pressure due to the larger-than-expected rate cut. In terms of positions, as of September 10, 2024, COMEX gold net long positions were around 24231 contracts, close to the levels before the Fed rate cut in 2022.

Recommended Targets: Zhijin Mining (601899.SH), Shandong Gold (600547.SH), Chifeng Gold (600988.SH), Shandong Gold International (000975.SZ), Zhongjin Gold (600489.SH), Yulong Shares (601028.SH), Hunan Gold (002155.SZ), Hengbang Shares (002237.SZ), etc.

Risk Warning: A significant increase in global gold production, large-scale exploration discoveries of easily extractable gold resources, unexpected changes in US monetary policy