Sovereign-debt risks and reserve diversification
seen helping revive investor optimism in the precious-metals market
·
Chinese
gold producers are nearing record highs as the
rebound in bullion prices boosts investor interest in precious-metal companies.
·
Shares
of Zijin Mining Group
and Chifeng Jilong Gold Mining Group have risen at least
40% from their July lows,
approaching their all-time highs.
·
A gauge
of mainland-listed Chinese gold stocks has gained around 25% from its recent low.
·
Gold prices
have rebounded sharply, rising about 12% over the past month in
New York following earlier sell-offs triggered by the oil-price shock.
·
Gold recently
broke above its 50-day moving
average, suggesting that the prolonged volatility in the gold market
may be easing.
·
Central-bank
purchases remain a major support for gold. China
and Poland were the leading buyers during the second quarter.
·
Global
central banks purchased a record
289 tonnes of gold in Q2, up 62% year-on-year.
·
Poland
was the largest buyer, adding 51 tonnes, while the People’s Bank of China purchased 33 tonnes,
ranking second.
·
South Korea
also plans to increase gold’s share of its foreign-exchange reserves, ending
a 13-year pause in purchases.
·
Gold rose
1.3% to US$4,479 an ounce
on Tuesday after weaker-than-expected US employment data reduced immediate expectations
of a Federal Reserve interest-rate hike.
·
Gold is
up 3.3% this year,
although it remains 18% below
its January 28 peak of US$5,447 an ounce.
·
Earlier
high oil prices had increased expectations of tighter US monetary policy, which
reduced the attractiveness of gold because it generates no interest income.
·
Institutional
investors are becoming more bullish: State
Street Investment Management expects gold to reach US$5,000 an ounce by year-end
or early 2027, while Deutsche Bank forecasts US$4,700 by year-end.
·
Fiscal
risks are supporting gold demand, particularly
concerns over rising sovereign debt. The US Congressional Budget Office projects
US federal debt could reach 120%
of GDP by 2036.
·
China’s
plans to develop Hong Kong as a regional gold-trading hub could
further strengthen bullion demand and support the internationalisation of the yuan.
·
Analysts
say sovereign reserve diversification
remains a key driver, while Chinese physical gold flows and ETF
demand are showing signs of strengthening.
Gold is regaining its role as a strategic safe-haven
asset, supported by record central-bank buying, sovereign-debt concerns and renewed
Chinese demand. The rebound is simultaneously lifting Chinese
gold-mining stocks, with investors increasingly betting that bullion prices could
approach US$5,000 an ounce.
[ABS News Service/11.08.2026]
A
rebound in gold prices has pushed shares of Chinese producers of the precious metal
near record highs, while the bullion’s status as a strategic investment remains
intact amid global central bank buying and financial stress in the world’s key economies.
Shares
of Zijin Mining Group and Chifeng Jilong Gold Mining Group,
the nation’s biggest metal producers, have risen at least 40 per cent from July
lows in Shanghai, approaching all-time highs set earlier this year. A gauge of mainland-listed
gold stocks has gained about 25 per cent from the low, according to data provider
Shanghai DZH.
The
reversal of the downtrend in gold stocks followed a similar pattern of bullion prices,
which have risen 12 per cent over the past month in New York after tumultuous sell-offs
triggered by the oil shock.
This
month, gold broke out of its 50-day moving average, a key technical level, bolstering
the argument that months of turmoil in the metal market may have run their course.
China and Poland led central-bank buying in the second quarter, partially countering
the sell-offs from exchange-traded funds (ETFs) and speculative positions.
“Gold
still earns its place as a strategic holding,” said Gary Dugan, CEO of The Global
CIO Office, which advises family offices and high-net-worth individuals for investments.
Gold
rose 1.3 per cent to US$4,479 an ounce on Tuesday, extending gains spurred by receding
fears of an immediate interest-rate hike after a weaker-than-expected reading in
US jobs data.
The
metal has risen by 3.3 per cent this year. Still, it is 18 per cent off the January
28 peak of US$5,447 an ounce, as elevated oil prices fuelled speculation that the
US Federal Reserve would tighten monetary policy, reducing the appeal of the non-yielding
asset.
Global
financial institutions have turned more optimistic, noting that demand from global
central banks and rising sovereign debt could revive the so-called debasement trade
after the flushing out of speculative positions.
State
Street Investment Management predicted that bullion prices would rise to US$5,000
an ounce by the end of the year or in early 2027, while Deutsche Bank forecast that
gold would touch US$4,700 by year’s end.
Global
central banks accelerated buying in the second quarter, purchasing a record 289
tonnes – a 62 per cent increase from a year prior. Poland’s central bank was the
biggest buyer in the three-month period, accumulating 51 tonnes of gold, and the
People’s Bank of China ranked second with a purchase of 33 tonnes. South Korea’s
central bank also said that it would increase gold’s share of its foreign reserves,
marking an end to a 13-year hiatus in purchases.
Gold
may provide a hedge against potential fiscal risks, State Street said, pointing
to a February projection by the US Congressional Budget Office that said the US
federal debt could rise to the equivalent of 120 per cent of gross domestic product
by 2036, surpassing the 106 per cent record set in 1946 after the end of World War
II.
China’s
ambition to turn Hong Kong into a regional hub for gold trading, as part of efforts
to promote the internationalisation of China’s yuan, may also boost demand for the
bullion.
“Sovereign
reserve diversification is still going on. Treasury financing needs remain enormous.
China’s official purchases continue,” said Stephen Innes, a managing partner at
SPI Asset Management. “Physical flows suggest that the Chinese gold ecosystem itself
may be expanding. ETF demand is starting to wake up.”