Editor’s Note
Gold has broken its recent trading range, with spot prices briefly surpassing $2,480 per ounce to set a new record high. This article examines the factors behind the surge.
After more than two months of sideways consolidation, gold prices have surged ahead once again.
On the morning of July 17, Beijing time, the price of gold hit a new historical high, with spot gold briefly breaking through $2,480 per ounce.
On the afternoon of July 16, a reporter from Securities Times·e company visited Shenzhen’s Luohu Shuibei Jewelry Wholesale Market, the largest gold and jewelry trading hub in China, and found the market teeming with people and bustling with activity.
At the gold wholesale floor in the basement of Jinzhan Jewelry Plaza, the reporter saw counters crowded with people inquiring about and purchasing gold. Many counters were so busy that staff had no time to attend to customers who stopped to look. Being in the entire trading market felt like everyone was “snatching up gold.”
Regarding branded gold prices, on July 17, major national brands such as Chow Tai Fook, Chow Sang Sang, Luk Fook Jewelry, Chow Tai Seng, and Chow Tai Fook generally quoted prices between 736 and 739 yuan per gram for gold jewelry, setting a new historical high. Only a few brands, like Caibai Jewelry, quoted prices around 712 yuan per gram.
(Statistics from Securities Times·e company based on Gold Price Query Network)
It is understood that domestic gold prices have been climbing steadily over the past year, advancing triumphantly. A gold store salesperson explained that since the beginning of this year, gold prices have been continuously rising, having broken through 700 yuan per gram for a long time. Although prices fell below 700 yuan/gram in June, they have recently returned to levels above 700 yuan/gram.
Data from the World Gold Council shows that in the first quarter of 2024, demand for gold bars and coins in mainland China reached 110.5 tons, a sharp increase of 68% year-on-year, marking the strongest first-quarter performance since 2013.
Some analysts believe that the sustained rise in gold this year, occurring in an environment of persistently high global interest rates and a strong US dollar, shows that factors including the dollar and real interest rates have failed to halt gold’s upward trend.
The latest research report from China Securities also indicates that the expectation of Fed rate cuts has strengthened, providing clear support for precious metals and offering some price support in the short term.
On the morning of July 17, the A-share gold and jewelry sector performed strongly. As of the time of writing, Laishitongling rose by the 10% daily limit, Lao Feng Xiang rose over 2%, and stock prices of gold-related listed companies such as Mankalon, Mingpai Jewelry, Chohong, and DR generally showed gains.
The continuous rise in gold prices has also driven improvements in the first-half performance of related companies.
So far, several gold and jewelry companies have announced their 2024 semi-annual performance forecasts, showing generally strong performance.
Chifeng Gold expects to achieve a net profit of 700 million to 740 million yuan in the first half of 2024, a year-on-year increase of 124.39% to 137.21%. Chifeng Gold clearly stated that the main reason for the performance change is that gold production and sales prices increased compared to the same period last year, and the company continued to implement cost reduction and expense control measures, effectively controlling production costs.
Shandong Gold also forecast positive first-half performance, expecting to achieve a net profit of 1.25 billion to 1.45 billion yuan in the first half of 2024, a year-on-year increase of 42.07% to 64.81%. Shandong Gold stated that in the first half of 2024, the company continued to optimize production layout, strengthen technical management and technological innovation, improve production efficiency and resource utilization; continued to deepen cost reduction and efficiency enhancement through technological innovation, process optimization, asset revitalization, centralized procurement, and policy benefits to enhance refined management levels, improve operational efficiency, and stabilize production costs; meanwhile, the continuous rise in gold prices in the first half of 2024 and the acquisition of Yintai Gold also contributed to the company’s profit growth.
Zijin Mining expects to achieve a net profit of approximately 14.55 billion to 15.45 billion yuan in the first half of this year, a year-on-year increase of about 41% to 50%. Regarding the performance change, Zijin Mining stated that the output of main mineral products increased year-on-year during the reporting period. The company’s mined gold output was about 35.4 tons, a year-on-year increase of 9.6%, and mined silver output was about 210.3 tons, a year-on-year increase of 1.3%. Meanwhile, the sales prices of mined gold, mined copper, and mined silver rose year-on-year.
The rise in gold prices will even help some listed companies turn losses into profits. Western Region Gold expects to achieve a net profit of 50 million to 69 million yuan in the first half of 2024, turning a profit year-on-year. The reason for the performance change is that the sales volume and sales price of gold produced from the company’s own mines increased compared to the same period last year.