- On Monday, China's A-share gold sector continued to be under pressure, mainly dragged down by the decline in international spot gold prices, as concerns about the Federal Reserve extending its tightening cycle intensified again.
- The geopolitical situation in the Gulf region has once again become tense, pushing up international crude oil prices and triggering deep concerns about inflation recovery, thereby reinforcing expectations that U.S. interest rates will remain high.
- Spot gold prices continued to fluctuate and correct during the Asian trading session, falling to around $4,321 per ounce, with the stock prices of gold mining and smelting companies subsequently experiencing a significant linked decline.
Spot Gold Prices Pressured by Interest Rate Ceiling Expectations
During Monday's Asian trading session, international spot gold (GOLD) prices continued the weak performance of the previous trading day. As of 9:24 a.m. Beijing time, spot gold prices had slightly fallen by 0.2%, quoted at $4,321.49 per ounce. The core logic behind the pressure on gold prices is that the recent macro environment has reignited market concerns that the Federal Reserve (Fed) may maintain a high-interest-rate environment or even resume rate hikes. Since gold itself is a non-yielding asset, when the market reassesses the path of U.S. nominal interest rates and raises expectations for risk-free returns, the opportunity cost of holding gold will significantly increase, thereby exerting direct valuation adjustment pressure on precious metal prices.
Gold Sector Stocks Generally Experience Sharp Declines
Directly transmitted by the decline in precious metal prices in the international commodity market, China's A-share market gold resource stocks saw a sharp decline in early trading on Monday. Among them, Shandong Gold International (000975:SZ) plunged by 6.5% at one point during the session, becoming the leading decliner in the sector. Meanwhile, other large gold mining and smelting companies were not spared, with intraday maximum declines for Zhongjin Gold (600489:SH), Chifeng Gold (600988:SH), and Hunan Gold (002155:SZ) generally ranging between 6% and 6.8%. Driven by the dual forces of risk aversion reassessment and interest rate repricing, market funds took profits on upstream resource stocks, causing the entire gold stock sector to show a continued weakening trend in early trading.
Energy Inflation Logic Offsets Geopolitical Risk Demand
It is worth noting that the situation in the Middle East and Gulf region has shown signs of tension again, which has, to some extent, pushed up international crude oil prices. In traditional macroeconomic logic, geopolitical turmoil usually triggers safe-haven buying of gold, but the oil price increase caused by the escalation of the Gulf situation has further heightened market expectations that core inflation will be difficult to fall back. If core inflation rebounds again due to rising energy costs, the Federal Reserve's policy space will be severely squeezed, possibly forcing further tightening measures. Therefore, inflation-induced tightening concerns currently dominate market trading, suppressing gold's inherent geopolitical safe-haven attributes.
Cross-Asset Linkage and Macro Variable Outlook
From a broader cross-asset allocation perspective, the future trend of gold prices and the gold sector will be highly dependent on the upcoming U.S. core inflation and employment data. If the U.S. economic performance continues to exceed expectations, leading to a further reassessment of the pricing of tightening policies, the dollar index and U.S. Treasury yields may gain additional support, posing a phase-out risk for gold assets. Conversely, if subsequent inflation pressures prove to be temporary, or if geopolitical risk premiums fully translate into recessionary impacts on the real economy, gold's appeal as a dual asset for inflation protection and risk aversion may regain capital allocation at low levels. Currently, there is a clear divergence between bulls and bears around the $4,300 mark.
