The Zhitong Finance App learned that Ping An Securities released a research report saying that against the backdrop of weakening data from various economic dimensions in February that exceeded expectations, COMEX is now accelerating its upward trend during the gold week. Looking at the medium term, expectations of the weakening of the US economy have begun to be gradually fulfilled. Under declining inflation, there is room for the Federal Reserve to cut interest rates. Currently, gold ETF holdings are still low, and there is room above the gold price. I am optimistic that this round of gold's upward trend will continue. This week, it is recommended to focus on the gold and copper sectors. Expectations for gold interest rate cuts in 2024 are gradually fermenting, and the gold center is expected to continue to rise. Furthermore, domestic downgrades have been implemented, and “trade-in” has opened up room for long-term metal demand. The shortage of copper concentrate continues to ferment, and support on the raw material side is gradually showing.

Related targets: It is recommended to focus on leading companies with high purity in the gold business: Shandong Gold (600547.SH) and Chifeng Gold (600988.SH). Copper: Domestic downgrades have been implemented, and “trade-in” has opened up room for long-term metal demand. The shortage of copper concentrate continues to ferment, and support on the raw material side is gradually showing. It is recommended to focus on leading companies: Zijin Mining (601899.SH).

Ping An Securities's views are as follows:

Precious Metals - Gold: Expectations of a weakening US economy have gradually been realized, and gold prices have accelerated upward.

As of 3.8, the main COMEX gold contract rose 4.5% to 2186.2 US dollars/ounce from last Friday's closing price, and ETF holdings fell 0.77% to 815.13 tons. The US non-manufacturing PMI recorded 52.6% in February, and the unemployment rate rose 0.2 percentage points from month to month to 3.9%. The US manufacturing and non-manufacturing PMI performance both ended the January rebound and turned downward, and the US economy began to weaken. At the same time, the unemployment rate ended bottoming out for three consecutive months and is now rebounding at a low level, indicating that the strong performance of the US job market is unsustainable. Against the backdrop of weakening data from various economic dimensions in February that exceeded expectations, COMEX now accelerates its upward trend during the gold week. Looking at the medium term, expectations of the weakening of the US economy have begun to be gradually fulfilled. Under declining inflation, there is room for the Federal Reserve to cut interest rates. Currently, gold ETF holdings are still low, and there is room above the gold price. I am optimistic that the gold price will continue to rise in this round.

Industrial Metals - Copper: “Trade-in” boosts demand expectations and focuses on copper and aluminum industrial metals.

Recently, the National Development and Reform Commission and relevant departments have researched and formulated the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in”. The “Plan” will focus on implementing the “four major actions” of equipment renewal, consumer goods trade-in, recycling, and standard upgrading. Trade-in for durable consumer goods such as automobiles, home appliances, and home furnishings will fully boost the scale of demand for industrial metals in the medium to long term. As of 3.8, the main contract for SHFE copper rose 1.5% month-on-month to 6,9950 yuan/ton. In terms of fundamentals, as of 3.8, domestic copper stocks reached 347,800 tons, accumulating 42,000 tons during the week, and downstream demand is still recovering. The SMM imported copper concentrate index reached 15.29 US dollars/ton, weakening again. According to SMM, due to tight copper concentrates and excessive raw material costs, refineries are already planning to overhaul or reduce feed volumes in advance. Domestic supply in the crude copper market is expected to decline in the second quarter, and it is difficult to see a rebound in crude copper processing costs. Overall, although the pace of recovery in downstream demand was slow in the two weeks after the holiday, supply shortages continued to ferment in the short term, which still provided strong support for copper prices. As demand for terminals picks up with macroeconomic policy support, the shortage of raw materials over a long period of time is still the core anchor for copper pricing.

Energy metal-lithium: Demand is picking up, supply is disrupted, and fundamentals have improved marginally.

On the raw material supply side, some Australian lithium mines have cut production and marketing guidelines for the 2024 fiscal year, and small and medium-sized African mines have stopped developing projects, and the supply of lithium concentrate has increased or decreased; on the lithium salt supply side, weekly production of lithium carbonate was about 8,730 tons, a decrease of 845 tons from last week. Temperatures picked up in March and carbon from salt lake industries were expected to be released, but some manufacturers in Yichun, Jiangxi suspended construction due to environmental factors, and routine maintenance of large smelters led to a month-on-month decline in production this week. On the demand side, production schedules at downstream cathode plants increased month-on-month in March. Demand picked up, but the growth rate was not strong yet. This week, lithium iron phosphate production was about 35,232 tons, a weekly increase of 384 tons, and the operating rate was about 35.9%. The short-term supply and demand pattern for lithium improved marginally, and we are optimistic about the mismatch between supply and demand in the first quarter when demand starts.

Risk warning: 1) The growth rate of terminal demand fell short of expectations; 2) the pace of supply release was greatly accelerated; 3) geopolitics disrupted raw material prices; 4) alternative technologies and products appeared; 5) major safety incidents occurred.