The Zhitong Finance App learned that according to the Securities Times, as of October 20, the gold prices of many well-known jewellery brands, such as Chow Tai Fu (01929), Chow Sang Sang (00116), and Lao Feng Xiang, had reached new highs over the years. Take Zhou Shengsheng as an example. On October 20, Chow Shengsheng's gold price was 614 yuan/gram, a record high within the statistical caliber (2010 to date). Shanxi Securities believes that in September, total retail sales of gold and jewelry increased 7.7% year on year, mainly due to a sharp increase in gold prices year on year. From a reporting point of view, driven by the Tanabata holiday in August and franchisees actively preparing goods in mid-late September, I am optimistic that gold and jewellery companies will now report for the third quarter. The price of gold has rebounded after experiencing a rapid decline in the early stages, which is expected to boost demand for gold jewelry terminals.

On October 20, according to a store clerk Chow Tai ?$#@$, “The price of pure gold rose all the way up in mid-late September, to over 600 yuan/gram, but fell back below 600 yuan/gram a few days before the National Day. As a result, many customers who arrived at the store during the holidays had a wait-and-see mentality and didn't start.” The store clerk said that now that the price of pure gold has once again broken through the 600 yuan/gram mark, it can be seen that money purchases during the National Day are “easy to pay.”

However, when some industry insiders visited physical stores, they discovered that in other brand stores such as China Gold and Asia Gold, various products, including Pure Gold and Craft Gold, have discounts of varying degrees, with discounts of around 40 yuan/gram.

In terms of price differences, as of October 21, the price of pure gold from mainstream domestic jewellery brands has generally exceeded 610 yuan/gram. Compared with the level of around 580 yuan/gram during the National Day holiday period, there is already a price difference of 30 yuan/gram.

Does the existence of a price difference mean that stable profits are not reimbursed? Actually, that's not the case! At the official gold recycling counters of major brands, the price of gold recycled gold is far lower than the current retail gold price, with a price difference of more than 100 yuan/gram. For example, Chow Tai Fook's retail price of pure gold was 615 yuan/gram on the same day, the retail price of gold investment (mainly gold bars) was 560 yuan/gram, while the gold price for gold recycling services was 455 yuan/gram. This means that only when the price of each gram of gold floats by more than 100 yuan/gram can investors achieve profit in the original gold purchase channel.

However, can the current “V-shaped” reversal allow the price of gold to gain a foothold?

Since September 26, the price of gold has started a downward trend. The opening price of the Shanghai Gold Exchange for the same day was 472 yuan/gram, while as of October 11, its closing price was 450.4 yuan/gram. However, after only half a month, the Shanghai Financial Union began a round of growth on October 12.

As of October 23, Shanghai Gold has closed at 476 yuan/gram in a row. Since October 12, the trend of the index has shown a typical “V” reversal, and the price has risen by more than 25 yuan/gram.

At the same time, both domestic and foreign gold prices have risen slightly. Prices of London gold and Shanghai gold have converged with the trend, and the previously obvious divergence has gradually subsided. Many gold ETFs have risen, and incremental capital has poured in more and more.

Regarding the current “V” trend of gold prices, He Jinlong, general manager of Uimei Investment, said on October 23 that previously there was a clear divergence between domestic and foreign gold prices. On the one hand, it was influenced by factors such as peripheral interest rate markets, and on the other hand, it was also stimulated by domestic demand for holiday gold purchases. Currently, the two prices are converging because the relationship between supply and demand has improved, and consumption sentiment has stabilized after the holidays. After this rapid adjustment, the divergence trend between domestic and foreign gold prices has been clearly corrected.

On October 23, Guojin Securities released a research report stating that before the Fed actually cut interest rates was the period during which the relative benefits of gold equity assets were most obvious.Currently, gold and gold stocks are more of a matter of timing, while the Fed is likely to cut interest rates to when it actually cuts interest rates is the stage where gold and gold stocks have increased most significantly, so they can be gradually laid out ahead of time.On the other hand, it stems from a sense of risk aversion spawned by the continuing escalation of the conflict between Palestine and Israel.

Looking ahead to the future market, the World Gold Council believes that bond yields will continue to soar due to the determined attitude of central banks around the world, led by the Federal Reserve, to keep interest rates high for longer in the future, and due to oversupply. Meanwhile, the fundamentals of the US economy remain strong, and economic resilience and rising yields may cause turmoil in the gold market. However, it is more likely that gold will only experience fluctuations rather than substantial weakness. Lower risk and return on stocks, higher risk of recession over the next 6-12 months, fluctuations in inflation, and central bank gold buying trends are supporting factors for gold.

Related concept stocks:

Chow Tai Fu (01929): On October 16, Guotai Junan released a research report stating that it maintains Chow Tai ?$#@$ (01929)'s “increase in holdings” rating. The estimated net profit for the 2024-26 fiscal year is 80.62/95.87/11.184 billion HK$11.184 billion. The corresponding EPS is HK$0.81/0.96/1.12, respectively, and the target price is HK$20.25. The company's FY2024Q2 business performance is in line with expectations. It has adopted a conservative store expansion strategy to focus on high-quality development. Benefiting from rising gold prices, discount control, structural optimization and cost control, the core operating profit margin is expected to exceed expectations.

Zhou Shengsheng (00116): As of October 23, the price of physical gold Zhou Shengsheng gold is 611 yuan/gram, down 5 yuan/gram from the previous trading day. The price of platinum is 372 yuan/gram today, down 3 yuan/gram from yesterday. Today's price of gold bars is 602 yuan/gram, down 5 yuan/gram from the previous trading day.