Gold Hits New High; Will It Continue to Rise?

Recently, gold has gone wild again.

After London gold hit a historical high on October 18, on October 23, London gold once again broke through the previous high. According to Wind statistics, this is the 36th time gold has set a historical record high this year. At the same time, the spot price of gold is also rising continuously, and the latest price of gold jewelry in various brand retail stores has generally exceeded 800 yuan/gram. Benefiting from this, A-shares of gold stocks have also shown a continuous upward trend.

Is there still a 10% upward space in the short term?

On October 23, London gold broke through the high point of 2748 US dollars/ounce on the 22nd during the trading day, once again setting a historical record high.

In this regard, some industry insiders pointed out that this is mainly caused by four major factors: First, the increase in global economic uncertainty, investors tend to choose gold as a risk-avoiding tool; Second, monetary policy is loose, these measures usually lead to currency devaluation, which in turn pushes up gold prices; Third, geopolitical risks trigger market risk aversion, driving up gold prices; Fourth, inflationary pressures, as the value of anti-inflation assets is highlighted, gold prices often benefit from rising.

Advertisement

Fangzheng Securities also pointed out in a recent research report, "The escalation of geopolitical risks and the statements of many central banks supporting the increase in gold reserves jointly drove the sharp rise in gold prices last week. Considering that the US economy may have shown signs of downward trend, the recession trade is expected to continue in the subsequent interest rate reduction cycle, and the gold price is expected to continue to open upwards."

So, how much room is there for gold to rise?

It is reported that Citigroup recently released a report, in which Citigroup said, "We have noticed that although the physical demand for retail in Asia is weak, and the Fed cut interest rates by 50 basis points last month and non-agricultural employment numbers are better than expected, the performance of gold and silver is still very strong." Citigroup further said, "If oil prices soar due to the recent escalation of the situation in the Middle East, gold prices should also rise."

At the same time, Citigroup raised its three-month gold price forecast from the previous 2700 US dollars/ounce to 2800 US dollars/ounce in the report, and the forecast for 6 to 12 months is 3000 US dollars/ounce.

And this forecast result is becoming the consensus of the market. For example, Vivek Dhar, an analyst at the Commonwealth Bank of Australia, also said recently, "The average price of gold futures may rise to 3000 US dollars/ounce in the fourth quarter of 2025." According to this calculation, gold futures still have about 10% growth space in the short term.Gold Stocks and ETFs Soar

As gold futures surge, the spot price of gold is also on the rise. Reports indicate that the price of gold jewelry in many stores has generally exceeded 800 yuan/gram, while at the beginning of April this year, the main domestic gold brands such as Chow Sang Sang, Chow Tai Fook, Lao Feng Xiang, Saturday福, Luk Fook Jewellery, Tsui Shing, Gold Peak, Chao Heng Ji, and Lao Miao Gold were all quoted between 717 yuan/gram and 719 yuan/gram. In response, this public account published an article titled "The Bullish Trend of Gold Remains Unchanged! Central Banks and 'National Teams' Enter with Heavy Capital" for follow-up coverage (click on the article link to review).

At the same time, the secondary market has also seen a "gold rush," with related ETFs surging consecutively. For instance, Hua An Gold ETF (518880) and Easy Fund Gold ETF (159934) both set historical highs during trading on October 23rd. So far this year, the interval increase for these two ETFs has been close to 30%.

According to announcements from these two ETFs, their latest investment portfolios are not focused on equity assets like stocks, but mainly on precious metal investments. The manager of Hua An Gold ETF stated, "In the long term, the United States is currently facing the dual pressures of high debt and high interest rates, which will increase the financial burden on the U.S. and affect the credit of the U.S. dollar. As a response, the necessity of allocating gold is increasing."

Gold-related stocks have also been rising recently. For example, since the start of the "9·24" market trend to the 21st, the stock price of Xiaocheng Technology has increased by 65.37%, while the Shanghai Composite Index has risen by less than 20% during the same period. This year, the stock price of Xiaocheng Technology has already doubled.

However, overall, gold stocks are mainly characterized by a "slow bull" trend. For instance, nine out of the gold stocks listed this year have seen gains, and except for Xiaocheng Technology, the increase in other gold stocks is generally within the range of 10% to 50% (see Table 1).

Performance Increases Across the Board

The "slow bull" trend of gold stocks aligns with their strong fundamental situation. According to Wind statistics, there are currently 11 gold stocks included in the Shenwan Gold Industry, with 10 achieving profitability in the first half of this year and 9 achieving profit growth during the same period.

Among them, Western Gold and Chifeng Gold both achieved double-digit performance growth. Western Gold stated in its semi-annual performance profit announcement, "The main reason for the increase in net profit attributable to the owners of the parent company and net profit attributable to the owners of the parent company after deducting non-recurring gains and losses compared to the same period last year is the impact of the main business: the sales volume of gold produced by our own mines increased compared to the same period last year, and the sales price increased compared to the same period last year."

As we enter the current busy period for the disclosure of third-quarter reports, the fundamental performance of gold stocks remains strong. For example, Hunan Gold, Shandong Gold, and Shandong Gold International have all disclosed their third-quarter reports for this year, and all are expected to have achieved rapid growth in performance. Hunan Gold, for instance, estimates that the company will achieve a net profit attributable to the parent company of 647 million yuan to 689 million yuan in the first three quarters of this year, a year-on-year increase of 68.50% to 79.40%. The company stated, "The main reason for the increase in performance during the reporting period is the year-on-year increase in the sales prices of the company's gold, antimony, and tungsten products."Shandong Gold and Shandong Gold International also have similar statements. From this perspective, in the current situation where performance speculation is gradually becoming mainstream, other gold stocks that have not yet disclosed their performance may be worth looking forward to (see Table 2). It is worth mentioning that Shandong Gold International has currently disclosed the official report for the third quarter. In the list of the top ten circulating shareholders of its latest period, in addition to two insurance products and two social security funds increasing their positions, the "Middle Eastern tycoon" Kuwait Investment Authority has also newly entered as one of the top ten circulating shareholders of the company.