On April 26, the gold sector rallied strongly in the intraday period. By the midday close, A-share western gold had risen or stopped. Hengbang shares and Hunan Gold had risen more than 6%, Xiaocheng Technology, Sichuan Gold, and Zhongrun Resources had risen by more than 3%, and Chifeng Gold, Yintai Gold, and CICC Gold had risen one after another.

In terms of Hong Kong stocks, Datang Tongjin rose more than 7%, Zhaojin Mining rose more than 5%, and Shandong Gold, Zijin Mining, and Lingbao Gold collectively rose.

According to the news, after the disappointing US GDP release last night, demand for safe-haven assets continued to rise, gold prices rebounded, and spot gold hit a high of 2334.60 US dollars. Such data has also prompted the market to re-evaluate the Federal Reserve's future policy path.

China's gold production and consumption achieved double growth

On April 26, the latest data released by the China Gold Association showed that in the first quarter of 2024, domestic raw gold production was 85.959 tons, an increase of 1.16% over the same period last year. Among them, 60.191 tons of gold minerals were completed, and 25.768 tons of non-ferrous by-products were completed. In addition, in the first quarter of 2024, the production of imported raw materials was 53.225 tons, an increase of 78.00% over the previous year. If this part of the imported raw material production is added, the country produced a total of 139.184 tons of gold, an increase of 21.16% over the previous year.

In the first quarter of 2024, China's gold consumption was 308.905 tons, an increase of 5.94% over the same period last year. Among them, gold jewelry was 183.922 tons, down 3.00% year on year; gold bars and coins were 106.323 tons, up 26.77% year on year; industrial and other gold was 18.660 tons, up 3.09% year on year.

It is worth noting that the impact of high gold prices on gold consumption in the first quarter of this year was polarized. The rapidly rising gold price, combined with gold jewelry processing costs and high brand premiums, has increased consumer wait-and-see sentiment, which has curtailed gold jewelry consumption to a certain extent.

For example, Chinese people have always favored gold for marriage, and those preparing to get married when the price of gold has soared are in a dilemma.

Meanwhile, gold jewellery retailers are under increased sales pressure. High gold prices and huge fluctuations have increased production and operation risks for gold processing and sales companies, wholesale and retail companies have become cautious in purchasing goods, jewelry processing enterprises have increased raw material costs, shipments have declined, and some small and medium-sized processing enterprises have even stopped working and taking vacations. In contrast, due to the surge in safe-haven demand, physical gold investment has received a high level of attention, and consumption of gold bars and coins with relatively low premiums has risen sharply.

US GDP exploded, gold soared

Last night, the US released GDP data for the first quarter. The annualized growth rate was 1.6%, lower than the expected 2.4%, and significantly lower than the GDP for the fourth quarter of last year. This also dampened the trend of the US dollar, thereby stimulating the strengthening of gold prices.

Industry insiders pointed out that the US GDP for the first quarter was lower than market expectations, which also weakened people's hopes for a soft landing in the US economy.

A soft landing refers to a scenario where the Federal Reserve can stabilize prices while avoiding falling into recession.

“Federal Reserve microphone” Nick Timiraos pointed out that Thursday's economic activity report sounded the latest wake-up call for investors and Fed policymakers. They have been holding their breath, hoping that falling inflation can officially start cutting interest rates this summer.

The data shows that after cooling off perfectly in the second half of last year, US inflation has been more stubborn than expected for the third month in a row. So far this year, individual economic growth and price data alone are not enough to significantly change the Fed's outlook. But the cumulative impact of these continuously disappointing data is significant. In particular, the inflation data has always been stronger than expected. In follow-up reports in recent months, the revision of the inflation data has increased. This trend has prompted investors and Federal Reserve officials to reconsider whether it is appropriate to cut interest rates this year.

Looking ahead to the future market, CICC said that at present, interest rates on US bonds have not declined significantly, yet gold hit 2,400 US dollars/ounce at one point. The model residual reached the highest level in history, which may indicate that short-term gold valuations are already too high. CICC believes that if the risk cools down in the future, or if speculative capital profits are settled, there is a risk that gold will fluctuate at a high level. However, from a medium- to long-term perspective, CICC believes that the rise in gold may not be over yet. Looking at structural factors, the US debt problem has accumulated and is difficult to recover. The anti-globalization and de-dollarization pattern may further deepen, or push central banks around the world to continue to increase their gold holdings to provide support for gold prices.

Guojin Securities also pointed out that the growth rate of the cost of self-produced gold stocks will slow down in 2023. It is expected that in 2024, when gold prices rise and cost control is relatively stable, gold stocks will perform well, and the current market value of gold stocks does not reflect more expectations of rising gold prices, and there is plenty of room to “make up”. It is expected that gold stocks will usher in a major upward trend. It is recommended to focus on targets such as Shandong Gold, China Gold, and Zijin Mining.