Multiple favorable factors drive a strong rebound in gold prices, the valuation of the gold mining sector is being repaired, and the elastic allocation value of EFUND GOLD MI ETF is highlighted
Affected by the weakening of U.S. macro data, the cooling of Federal Reserve interest rate hike expectations, and geopolitical tensions, gold prices have rebounded strongly to around $4,400 since early August. Continuous purchases of gold by global central banks provide support, and gold has long-term allocation value. Compared to spot gold, gold mining companies have greater elasticity due to operational leverage advantages. The EFUND GOLD MI ETF rose 14.38% in August, with a significant valuation recovery, making it suitable for medium to long-term holding to capture excess returns from rising gold prices
According to Zhitong Finance APP, gold prices have started a strong rebound since the disappointing non-farm data in early August, with spot gold prices rising 8.46% since August and currently fluctuating around $4,400. Multiple macroeconomic data points, including U.S. non-farm payrolls, CPI, and retail sales, have shown weakness, leading to a rapid decline in market expectations for further interest rate hikes by the Federal Reserve. CME tools indicate that the probability of a rate hike in September has fallen to around 35%, putting downward pressure on the U.S. dollar index, which directly benefits gold pricing. Meanwhile, geopolitical tensions in the Middle East have intensified again, causing oil prices to rebound and bringing volatility to the market. In the medium to long term, the net gold purchases by global central banks in the second quarter remained high, with continued official purchases providing solid underlying support for gold prices.
Currently, the bullish momentum driven by weak U.S. data is dominant, but the market is not rising without constraints. On one hand, weakening employment and inflation are lowering the upward pressure on real interest rates, and central bank gold purchases provide a medium to long-term safety cushion, making it easier to attract buying on dips during the correction phase. On the other hand, disturbances in the Middle East are pushing up oil prices, reintroducing potential concerns about inflation rebound, and long-term U.S. Treasury yields have not fully retreated, creating some technical resistance around $4,500. The short-term market needs to wait for the FOMC minutes, oil price fluctuations, and changes in ETF holdings to validate the situation.
In the short term, gold is in a strong oscillating pattern driven by favorable data, and it is recommended to control positions for medium to long-term holding. From a medium-term perspective, gold is still in the mid-cycle of the long-term reconstruction of reserve currencies and high fiscal debt era, with continued central bank gold purchases and ETF fund inflows providing support, establishing a foundation for gold price elevation. Gold has asset diversification value and can hedge against risks such as inflation and weakening monetary credit.
Compared to spot gold, gold mining companies have a rigid cost advantage, possessing 2-3 times natural operational leverage, which highlights their elasticity advantage during periods of rising gold prices. The increase in gold prices drives the valuation recovery of the gold mining sector, and gold mining companies, leveraging operational leverage, significantly outperform spot gold, with the EFUND GOLD MI ETF (02824) rising 14.38% since August, showing strong performance.
As an indirect allocation tool, the EFUND GOLD MI ETF (02824) is suitable for investors looking to seize the sector recovery opportunities brought by rising gold prices from a long-term perspective. Ordinary investors are advised to adopt a dollar-cost averaging approach to smooth out short-term fluctuations and mitigate short-term market disturbances
