Market Insight | Gold stocks continue to decline, PBOC suspends gold purchases for 3 consecutive months, Fed does not cut interest rates urgently
Gold stocks continue to decline, with the central bank suspending gold purchases for three consecutive months and the Federal Reserve not implementing an emergency rate cut. The central bank's gold reserves remain unchanged at 72.8 million ounces. Official demand in the second quarter dropped by 39%. It is still the general direction for the central bank to increase gold holdings in the future. The market is anticipating an emergency rate cut by the Federal Reserve, but there has been no action so far. The gold market's performance depends on the game between risk concerns and rate cuts. Gold may experience a short-term decline before rebounding, but silver may continue to be weak
According to the Wise Finance app, gold stocks continue to decline. As of the time of publication, Shandong Gold (01787) fell by 3.93% to HKD 15.14; China Gold International (02099) fell by 3.23% to HKD 40.50; Lingbao Gold (03330) fell by 2.42% to HKD 3.23; and Zijin Mining (02899) fell by 1.59% to HKD 14.82.
On the news front, data released by the central bank shows that as of the end of July, the central bank's gold reserves were 72.8 million ounces, unchanged for the third consecutive month. The central bank ended its 18-month gold buying spree in May. Additionally, the World Gold Council previously stated that official demand in the second quarter decreased by 39% compared to the first quarter of this year. Wang Qing, Chief Macro Analyst at Orient Securities, pointed out that from the perspective of continuously optimizing international reserve structure and prudently promoting the internationalization of the renminbi, the central bank's continued gold buying is still the general direction.
Shenwan Hongyuan stated that the market expects the Federal Reserve to make an emergency rate cut and a larger rate cut in September. However, the Federal Reserve currently indicates that there will be no emergency rate cut. The gold market may depend on the balance between concerns about systemic risks and larger scale rate cuts. As long as there is no widespread asset decline caused by a recession-based liquidity crisis, it will enhance the upside target for gold. If a substantial recession or financial crisis occurs, gold may experience a short-term decline followed by a rebound, but silver may continue to be weak