HuaChuang Securities: Geopolitical easing and weakening employment data create a repair window for gold

According to the Zhitong Finance APP, Huachuang Securities released a research report stating that the weakening of short-term inflation and employment data has cooled interest rate hike expectations, creating a repair window for gold. Attention should be paid to the U.S. non-farm payroll data on the 7th and the CPI data on the 12th this month for further verification of employment and inflation. The firm believes that the current central bank's gold purchases are gradually showing and strengthening their support for gold prices. The current bottom position of gold is relatively clear, and the valuation is expected to continue to recover, highlighting the medium to long-term allocation value. It is recommended to pay attention to the gold sector and related assets, as well as industry leaders and clearly growing targets.

The main points of Huachuang Securities are as follows:

Events

On August 4th, according to the U.S. Bureau of Labor Statistics (BLS), the June JOLTs job openings fell from a revised 7.54 million in May to 7.36 million, with an expectation of 7.4 million job openings. On August 5th, according to Hong Kong Wind Information, the U.S. ADP employment increased by 44,000 in July, with an expectation of an increase of 70,000, and the previous value was revised from an increase of 98,000 to an increase of 95,000. Against this backdrop, U.S. Treasury Secretary Janet Yellen stated in an interview that the U.S. may reach an agreement with Iran to open the Strait of Hormuz; Iranian Foreign Ministry spokesman Saeed Khatibzadeh stated on the 5th that an agreement had been reached with Oman regarding shipping routes in the Strait of Hormuz. Meanwhile, at 12:00 AM Beijing time on July 30th, the Federal Reserve maintained the federal funds rate target range at 3.5%-3.75%. Additionally, the U.S. June core PCE price index was released, showing a year-on-year increase of 3.3%, in line with expectations, and a previous value increase of 3.4%; month-on-month, it increased by 0.1%, with an expectation of 0.2%, and a previous value increase of 0.3%.

The firm believes that the weakening of short-term inflation and employment data has cooled interest rate hike expectations, creating a repair window for gold.

Firstly, the outcome of the July Federal Reserve meeting alleviated short-term interest rate hike expectations, leading to a decrease in September's interest rate hike expectations; secondly, from the inflation data, considering that the U.S.-Iran conflict has cooled compared to the second quarter, and with the recent expectations of renewed negotiations between the U.S. and Iran continuing to ferment, energy prices have fallen to a controllable range. The inflation data and employment data released in July and August indicate a cooling of inflation expectations, and with the U.S.-Iran conflict being controllable, future inflation is expected to trend downward; thirdly, from U.S. Treasury yields, the current 10Y and 30Y U.S. Treasury yields have broken 4.6% and 5.1%, respectively. As of August 3rd, the total amount of U.S. Treasury debt has risen to $39.74 trillion, an increase of $1.32 trillion compared to the beginning of the year, which may suppress interest rate hike expectations. The firm believes that attention should be paid to the U.S. non-farm payroll data on the 7th and the CPI data on the 12th for further verification of employment and inflation.

Global ETF funds are gradually entering a net inflow state, and gold investment demand is expected to rebound.

In June, global physical gold ETFs experienced outflows of approximately $8.9 billion; outflows occurred in all regions, with the largest outflow in North America. The total assets under management (AUM) of global gold ETFs decreased by 13% to $526 billion, and total holdings decreased by 74 tons to 4,047 tons. Despite the outflows in June, global gold ETFs maintained a net inflow trend in the first half of the year, with inflows of approximately $8 billion. However, since July, global gold ETFs have gradually entered a net inflow state. As of the latest data released by the World Gold Council on July 24th, global gold ETF holdings amounted to 4,063 tons, an increase of 14.7 tons compared to the end of June, with a weekly net inflow of 18.12 tons According to Wind data, as of August 4, the SPDR Gold ETF held 32.45 million troy ounces, an increase of 73,000 troy ounces compared to the end of July and an increase of 135,700 troy ounces compared to the end of June.

In the medium to long term, central bank gold purchases provide a floor, and the long-term logic of de-dollarization remains intact.

In the first quarter of 2026, central banks around the world purchased a total of 244 tons of gold, continuing a streak of 22 consecutive quarters of gold purchases. By country, 1) China's central bank gold purchases in June reached a recent high: as of the end of June 2026, China's gold reserves stood at 75.44 million ounces, an increase of 480,000 ounces from the end of May, marking a new high for this round of accumulation and achieving an increase for the twentieth consecutive month. As of Q1 2026, the ratio of gold to total foreign exchange reserves for the People's Bank of China was 9.14%, compared to a global average of 28.2%, indicating that there is still room for growth in China's central bank gold reserves. 2) The unconventional selling pressure from Turkey and Russia has eased somewhat; in March-April 2026, gold selling pressure mainly came from Turkey and Russia, but the selling from these two countries has slowed down in May-June. 3) Emerging economies still have room for gold allocation: According to the World Gold Council's June report on the "2026 Global Central Bank Gold Reserve Survey," the vast majority of surveyed central banks (89%) believe that global central bank gold reserves will increase in the next 12 months; the proportion of surveyed central banks that expect their own gold reserves to increase in the next 12 months reached a record 45%. Among them, the National Bank of Poland, the largest gold buyer globally in 2025, plans to purchase 150 tons of gold in 2026, raising its gold reserves to 700 tons. The Bank of Korea plans to purchase gold for the first time in 13 years; according to reports from the JoongAng Ilbo and other South Korean media on August 3, the Bank of Korea plans to procure domestically refined gold bars for the first time in 13 years and has already purchased a small amount of gold ETFs in the second quarter. The bank believes that the current central bank gold purchases are gradually showing and strengthening their supportive effect on gold prices.

Risk Warning: Federal Reserve policy may be more hawkish than expected; geopolitical uncertainties; global central bank gold purchases may fall short of expectations; inflows into global gold ETFs may be less than expected