Gold price shows signs of fatigue! Gold stocks experience a collective sell-off.

On September 4th, gold stocks in both Hong Kong and A-share markets experienced a collective sell-off once again!

Among them, the Hang Seng Gold Sector Index saw a 4-day consecutive decline. In terms of constituent stocks, China Gold International (02099.HK) plummeted by 10.03%, with a cumulative drop of over 25% in the past 10 trading days; Zijin Mining (02899.HK) fell by 6.15%, while Zhaojin Mining (01818.HK), Lingbao Gold (03330.HK), and Shandong Gold (01787.HK) also performed poorly, with declines of 2.78%, 2.42%, and 1.93%, respectively.

On the A-share side, Zijin Mining (601899.SH) plummeted by 5.23%, China National Gold (600489.SH) fell by 2.42%, Western Gold (601069.SH) dropped by 1.71%, and Shandong Gold (600547.SH), Chifeng Gold (600988.SH), and others also slid.

In terms of news, on Tuesday (September 3rd), under the pressure of a stronger US dollar, gold prices fell to their lowest point in over a week. Spot gold fell below the 2500 mark, closing down by 0.28%, at $2492.65 per ounce.

According to Wind data, as of the time of writing, spot gold continued its downward trend, with a decline of 0.26%, to $2486 per ounce.

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So far this year, gold prices have repeatedly hit new highs, with spot gold rising by more than 20% this year, and setting a historical high of $2531.60 per ounce on August 20th, after which it continued to maintain a high position. However, since entering September, the trend of gold prices has begun to show signs of fatigue.

Market analysis suggests that the recent correction in gold prices is mainly due to the market digesting the previous expectations of the Federal Reserve's interest rate cuts. Last Friday, the US core PCE price index for July rose by 2.6% year-on-year, consistent with the previous month and slightly lower than the market's expected 2.7%; it increased by 0.2% month-on-month, in line with expectations. The market's expectations for a significant rate cut by the Federal Reserve in September have diminished, the US dollar index rebounded, and the precious metals trend faced pressure.

Currently, the market is awaiting this week's non-farm employment data from the United States, as well as the August ISM manufacturing/non-manufacturing PMI, initial jobless claims for the week, August ADP employment numbers, and the August unemployment rate. The market's wait-and-see sentiment is gradually thickening.

Looking ahead, as expectations for the Federal Reserve to cut interest rates at the September meeting continue to rise, many institutions remain firmly optimistic about gold!Goldman Sachs stated in its latest report that the likelihood of gold prices rising in commodities is the highest, maintaining a target price of $2,700 per ounce by early 2025. Based on the spot gold price on Tuesday, Goldman Sachs believes that there is still more than an 8% upside potential for gold prices by the beginning of next year.

Goldman Sachs pointed out that this forecast is based on three major reasons. First, due to concerns about U.S. financial sanctions and U.S. sovereign debt, the global central bank gold purchases have tripled since mid-2022, which is structural and is expected to continue. Second, the upcoming Federal Reserve rate cuts will prompt Western capital to flow back into the gold market, which is an important factor missing in the significant rise of gold over the past two years. Third, gold is the preferred risk hedge tool and has the greatest potential for recent increases.

Macquarie also pointed out in a recent research report that gold has outperformed most commodities in the past year, and currently, it has only slightly declined at the beginning of the month. They believe that as the interest rate cut cycle approaches, market concerns about whether the economy can achieve a "soft landing" are increasing, and there is still room for gold prices to rise.

At the same time, many institutions also analyze that although the expected interest rate cuts by the Federal Reserve and geopolitical risks will boost the rise of gold prices, in the short term, gold prices may face the risk of a correction.

Gu Fan Ding, fund manager of CITIC Prudential Global Commodity Theme (QDII-FOF-LOF), pointed out that in the medium and long term, there is no bubble in allocated funds. With the continuous decline of the U.S. dollar's credit, the increasing uncertainties in the international situation, and the impact of the Federal Reserve's high probability of starting interest rate cuts in the near future, gold prices still have room to rise. However, in the short term, the speculative sentiment in the gold market is still high, and it is necessary to be vigilant about the fluctuations caused by the exit of arbitrage funds.

Zhang Chen, a precious metals analyst at Yide Futures, stated that the trend of gold prices after this round of interest rate cuts by the Federal Reserve should pay attention to the fundamentals of the U.S. economy and the subsequent policy responses taken by the Federal Reserve. If the rate cut fails to prevent an economic "hard landing," the Federal Reserve will inevitably increase the intensity of rate cuts to boost market confidence. The expansion of the rate cut range, the extension of the cycle, and the acceleration of the pace may benefit gold prices more. If the U.S. economy achieves a "soft landing" as expected after the rate cut, it would be relatively unfavorable for the trend of gold prices.