It's Black Friday again! Today's Shanghai Index fell below 2,700 points in the intraday market, the first time since March 2020, and another phased “breakthrough”.

The intraday Shenzhen Stock Exchange Index fell more than 3% to below 8,000 points, the first time since February 2019. More than 5,100 shares in the city fell, and only 200 stocks rose.

However, while the market continues to be hit hard, gold stocks bucked the trend and strengthened collectively.

As of press release, the Hong Kong stock Zhaojin Mining industry rose more than 6%, while Shandong Gold, Zijin Mining, and Lingbao Gold followed; A-shares of Shandong Gold and Yintai Environmental rose more than 2%, while Chifeng Environmental and CICC Gold followed suit.

Currently, the price of gold continues to rise and is close to a one-month high. Spot gold closed up 0.77% yesterday to close at 2054.88 US dollars/ounce, and continues to rise slightly today.

Earlier data showed that US unemployment claims increased last week, and the market's focus turned to US non-farm payrolls data to obtain more clues about the direction of the Federal Reserve's monetary policy.

The multi-factor resonance caused the price of gold to soar for a whole year

From a domestic perspective, recently, a number of listed gold companies' performance reports have been released one after another, and profits will generally increase in 2023.

Among them, many gold and retail companies, such as Shandong Gold, China Gold, Chifeng Gold, and Sichuan Gold, all achieved significant profit growth in 2023.

Shandong Gold expects to achieve net profit of 2 billion yuan to 2.5 billion yuan in 2023, an increase of 60.53% to 100.66% over the previous year;
Chifeng Gold is expected to achieve net profit of about 760 million yuan to 830 million yuan, an increase of 68.47% to 83.99% over the previous year;
Compared with the same period last year, CICC Gold expects to increase its net profit by RMB 588 million to RMB 1,084 million, an increase of 31.01%-57.21% over the same period last year;
Chao Hongji expects to achieve net profit of 320 million yuan to 400 million yuan, an increase of 60.70% — 100.88% over the same period last year;
Caibai Co., Ltd. is expected to achieve net profit of 670 million yuan to 735 million yuan in 2023, an increase of 45.61% to 59.74% over the previous year;
Zijin Mining expects net profit of about RMB 21.1 billion in 2023, an increase of about 5.28% year on year;
...

Overseas, international gold prices have continued to fluctuate at a high level due to geopolitical conflicts and the influence of the Federal Reserve.

Previously, the Russian-Ukrainian war and the conflict between Palestine and Israel continued to ferment; since this year, the situation in the Red Sea has also intensified. According to the latest report from the Houthis in Yemen, 10 military attacks were carried out on ships linked to Israel, the US, and Britain in the Red Sea and the Strait of Mande this week, and they will continue to attack these ships until the end of the invasion and siege of the Gaza Strip.

The continued escalation of geopolitical conflicts has intensified risk aversion in the market, thereby fueling a sharp rise in gold prices. International gold prices rose 13% last year, hitting a record high in early December last year.

Furthermore, since the Federal Reserve began the current rate hike cycle in March 2022, the cumulative rate hike rate has reached 525 basis points; however, since September 2023, interest rates have remained unchanged for four consecutive meetings.

Currently, there is a consensus that the Fed's interest rate hike has peaked, and the market is focusing on when the interest rate cut will occur. As expectations of the Fed's interest rate cuts continue to increase, the price of gold is expected to continue to rise, supporting the increase in safe-haven demand for gold.

Recently, the Federal Reserve introduced its latest interest rate resolution, which continues to keep current interest rates unchanged. Powell “stifles” the market's expectations that interest rate cuts will begin in March.

Despite the Federal Reserve's hawkish stance on monetary policy, the price of gold closed higher on Thursday. Analysts believe that “multiple factors” are expected to push the price of gold back to a record high.

Is a gold bull market coming?

Last year, central banks maintained an “alarming rate” of gold purchases.

The World Gold Council recently stated that the net purchase volume in 2023 was 1,037 metric tons, almost the same as the 2022 record; total gold consumption, including the OTC market, increased by about 3% last year to 4,899 tons.

Louise Street, a senior market analyst at the World Gold Council, said that continued gold purchases by global central banks in 2023 once again strongly boosted demand for gold and offset the weakness in demand in other sectors of the gold market to a certain extent. Demand for gold throughout the year was far higher than the moving average of the past ten years.

The report also indicates that domestic demand for gold bars and coins may continue to be strong in 2024.

The Federal Reserve may adopt potential interest rate cuts this year. Coupled with the tense situation in the Middle East and more than 60 global elections, various factors may encourage investors to switch to gold, thereby boosting the price of gold. It is expected that the total demand for gold will expand again in 2024.

Adam Coase, president of Libertas Wealth Management Group, said that central banks “hoard gold like treasure hunters. Despite strong negative factors” such as soaring bond yields and the “unusually strong” dollar, their insatiable appetite can still help boost the price of gold.

Goldseek.com president Peter Spiner said that gold is “steadily on the launch pad” and expects the price of gold to rise to a record high in the next few months.

He pointed out that it is impossible to tell from overall sentiment indicators that gold is close to a record high, but this is a “typical characteristic of the stealth Taurus trend,” and futures prices have hardly changed compared to when last year closed.

“It happened quietly, and as we steadily enter a record price range, the exciting phase of the bull market is coming.”

Investors' focus now turns to Friday's US non-farm payrolls data to obtain further clarification on interest rate trends.

If labor market data weakens on Friday, the price of gold may rise further, as expectations of lower interest rates tend to favor non-yielding assets.

Ricardo Evangelista, a senior analyst at ActivTrades, pointed out that the Federal Reserve's monetary policy stance is currently the most important driver of gold prices.

Driven by expectations of interest rate cuts, geopolitical uncertainty, and concerns about the global recession, gold is expected to rise further in 2024, maintain its status as a safe-haven asset, and may reach new highs.

He believes that the price of gold will reach a high of around 2,200 US dollars per ounce, while the average annual price is 2,100 US dollars per ounce.