For a long time, the price of gold has finally opened a long-lost upward mode. Since November, as of the early morning of November 12, Beijing time, the international spot gold price rose from $1647.79 / ounce to $1770.53 / ounce, an increase of 7.45%. Institutions believe that in the United States inflation is weakening, or the economy will be weak against the background of recession, the Federal Reserve rate hike cycle is expected to slow down. Affected by this, the gold price, which has been in a state of grinding bottom, ushered in the configuration opportunity.

Since the beginning of October started a wave of decline again, the international gold price performance continues to be depressed. In November, affected by the unexpected rise in US unemployment data, the slowdown in US inflation data, and the Federal Reserve's interest rate hike or slowdown, gold prices resumed their upward mode. Especially since November 7 this week, the international spot gold price rose 5.3%, the trend is quite strong.

Affected by the rise in gold prices, the performance of gold-themed funds with sluggish performance in the early stage "turned over", and the increase in the net value of some funds is more impressive. Last week, the weekly price of a number of gold ETFs rose more than 3%, for example, the Hua 'an Gold ETF rose 3.89%.

From the perspective of fund flow, gold ETFs have also reversed the previous net outflow trend, and funds have begun to grasp gold investment opportunities with the help of gold ETFs. According to Dongcai Choice data, the total share of gold ETFs increased by nearly 30m last week. This is the first time since October that the weekly share of gold ETFs has achieved net subscription.

Driven by the rise in international gold prices, the gold concept index rose by 8.15% last week, and the share prices of many gold leading concept stocks rose sharply. Specifically, on November 11, Shandong Gold's share price rose by more than 8%, from the perspective of weekly increase, close to 14%; Chifeng Gold shares rose more than 4% on November 11, with a weekly increase of nearly 9%.

For gold shares, some institutions have long been "ambushed" among them. In the third quarter of this year, the National Social Security Fund 118 portfolio greatly increased the position of Chifeng gold more than 27 million shares, Hanchuang management of Dacheng new industrial mix, Dacheng Rui Jing mixed funds have taken additional position operations, Tang Xiaobin management of Guangfang multi-factor mix to become the new top ten circulating shareholders of Chifeng Gold.

It is worth mentioning that the World Gold Council's latest "Global gold Demand Trend Report" shows that in the third quarter of 2022, global gold demand (excluding over-the-counter transactions) increased by 28% to 1181 tons. The strong performance in the third quarter has brought total gold demand so far this year back to pre-pandemic levels.

According to the World Gold Council, investment in gold in the third quarter of this year fell 47% year-on-year, mainly due to ETF investors in response to the dual challenges of aggressive interest rate hikes and a strong dollar, reducing investment scale, resulting in a sharp outflow of 227 tons of gold ETFs in the third quarter. Coupled with weak over-the-counter demand and negative sentiment in the futures market, gold's performance was hindered, resulting in a sequential decline of 8% in the third quarter of 2022.

Gold, on the other hand, remains popular with individual investors. The World Gold Council said that in response to high inflation and geopolitical risks, individual investors are increasingly interested in gold as a store of value. Investors bought bullion bars and coins as a hedge against inflation, boosting total retail investment demand by 36 per cent year-on-year.

Looking forward to the future market, Hua 'an Fund Index and Quantitative Investment Department believes that after the Federal Reserve's November FOMC meeting set the tone, the market has a clearer expectation of its interest rate hike path in December and next year. In the medium and long term, with the decline of high inflation and the increasing probability of economic recession, the gold-driven logic gradually changes from stagflation to recession, institutional funds or increase gold allocation, and the value of gold allocation gradually increases.

Everbright Securities expects that there is limited space for the decline of long-term inflation expectations, and the real interest rate will decline in the first half of 2023, when the gold price is expected to rise.

Source: Shanghai Securities News