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Gold prices surge on multiple factors

By LIU YUKUN | China Daily | Updated: 2023-12-05 09:14
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Shoppers browse gold ornaments at a jewelry shop in Shanghai. CHINA DAILY

Spot gold surged to a record, crossing $2,100 per ounce in early Asian trading on Monday, and experts predicted further fresh highs as the global rush for bullion may continue on growing expectations for US rate cuts early next year.

Prices of gold futures also touched a record high. The benchmark COMEX gold futures surpassed $2,150 per ounce, a daily increase of over 3 percent. COMEX is an abbreviation of the Commodity Exchange Inc, a futures and options market in the United States.

Gold-related stocks saw a substantial opening surge in the A-share market on Monday. Shares of Chifeng Gold rose nearly 6 percent to close at 14.87 yuan ($2) per share.

Shares of both Sichuan Rongda Gold and Shandong Gold Group surged more than 4 percent.

Gold jewelry prices of major Chinese brands such as Chow Tai Fook exceeded 630 yuan per gram on Monday.

Li Ting, manager of the investment advisory department at Tongguan Jinyuan Futures, said the weakening US economy is one of the reasons behind surging gold prices.

Li said investors are betting that the Federal Reserve will initiate an early rate cut in the first half of next year, propelling the continuous rise in gold prices.

Wu Zijie, precious metals analyst at Jinrui Futures, said that the safe-haven sentiment is also driving gold prices to new highs. The sustained economic weakness in the US and geopolitical conflicts in Eastern Europe and the Middle East have heightened global economic and political uncertainties, contributing to increased safe-haven demand and leading to heightened need for gold as a value-preserving asset.

Everbright Securities predicted that both gold prices and gold-related equities will experience an uptrend in the first half of 2024.

It also said a slowdown in the US economic growth rate in 2024 is highly possible and anticipated a US rate cut and a weaker dollar next year, paving the way for an uptrend in gold prices and gold-related equities.

According to Everbright Securities, gold prices are likely to continue to set records next year.

Data from the World Gold Council showed that demand for gold bars and coins in China surged to 82 metric tons in the third quarter despite soaring gold prices, marking a remarkable 66 percent surge on a quarter-to-quarter basis and a 16 percent year-on-year increase from the high base in the third quarter of 2022.

It said this represented the strongest third-quarter performance since 2018, significantly surpassing the five-year average of 64 tons and the 10-year average of 61 tons. Cumulatively, in the first nine months, China's demand for gold bars and coins reached 197 tons, up 26 percent year-on-year.

In terms of gold jewelry, China's total demand in the third quarter was 154 tons, down 6 percent year-on-year. In the first nine months, China's total demand for gold jewelry reached 481 tons, up 8 percent year-on-year.

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