Understanding the Market | Gold stocks warmed up today, Goldman Sachs pointed out that central bank buying remains strong and is expected to provide bottom support for gold
Gold stocks warmed up today, with ZHAOJIN MINING and PERSISTENCEGOLD showing significant gains. Goldman Sachs pointed out that despite facing pressure from the Federal Reserve's tightening expectations, strong buying from central banks provides bottom support for gold, with purchases reaching 81 tons in May. Zhongtai Securities believes that the valuations of gold mining companies have fallen to low levels, offering high odds, and they are expected to enjoy dual benefits from valuation recovery and rising gold prices in the future
According to Zhitong Finance APP, gold stocks have warmed up today. As of the time of writing, ZHAOJIN MINING (01818) rose by 4.85% to HKD 18.37; PERSISTENCEGOLD (02489) rose by 4.41% to HKD 0.71; Chifeng Jilong Gold Mining (06693) rose by 2.9% to HKD 26.24; Shandong Gold (01787) rose by 2.51% to HKD 17.58.
In terms of news, China's gold reserves at the end of June were reported at 75.44 million ounces (approximately 2,346.446 tons), an increase of 480,000 ounces (approximately 14.93 tons) month-on-month, marking the 20th consecutive month of gold accumulation by the central bank. Goldman Sachs stated that despite facing pressure from the Federal Reserve's tightening expectations, central bank buying is expected to provide bottom support for gold. Current demand remains strong; according to their estimates, the central bank's gold purchases in May amounted to 81 tons, with a three-month average monthly purchase of 67 tons, far exceeding the average level of 17 tons before 2022.
Zhongtai Securities released a research report stating that regarding gold investment, on one hand, we always emphasize the investment value on the commodity side; on the other hand, after the deep correction in the equity side in the first half of the year, the current valuation level of gold mining companies has significantly dropped to a low level compared to the beginning of the year, offering a high risk-reward ratio. In addition to the valuation recovery trend, there is also the potential to further enjoy the price elasticity brought by rising gold prices. Meanwhile, the process of rising gold prices itself continues to enhance the winning probability of gold stock investments
