The Zhitong Finance App learned that CITIC Securities released a research report saying that since September, ETF and central bank purchases that have exceeded expectations have had a sufficient hedging effect on futures side liquidity sales. Gold prices in the past two weeks have shown signs of stabilizing at the bottom, and the bottom of the gold price is expected to rise from the end of June. For example, the gold sector rebounded first compared to gold prices in July. If the current gold price stabilizes, it will be an important sign of a rebound in the gold sector. Pay attention to opportunities for a rebound in the gold sector.
CITIC Securities's main views are as follows:
The core factor behind the fall in gold prices in September was tight liquidity against the backdrop of a sharp rise in US bond yields.
Looking back recently, the spot gold price fluctuated and fell from a phased high of close to 4,700 US dollars/ounce at the end of August to around 4,100 US dollars/ounce at the end of September. The past two weeks showed signs of stabilizing at the bottom. The bank believes that the main selling force for the fall in gold prices in September came from the futures side (COMEX net long positions were reduced by about 85 tons according to the US Commodity Futures Trading Commission data), while futures side sales were mainly affected by the sharp rise in US bond yields and liquidation of liquidity (10-year US Treasury yields rose from 4.75% at the end of August to 5.29% at the end of September). The rise in US bond yields is due, on the one hand, to austerity expectations amid concerns about inflation caused by high oil prices in the context of the prolonged conflict between the US and Iran; on the other hand, the rise in term premiums due to concerns about debt expansion.
Investment demand and central bank allocation requirements showed resilience beyond expectations.
At the same time, compared to the large outflow on the futures side, ETFs (net inflow of 67 tons in September) and the central bank's gold purchases (China added 23 tons in September and reached a new high) showed strength that exceeded expectations. Driven by the buying power of both sides, compared to the end of June (around 4,000 US dollars/ounce), the current round of gold prices showed signs of rising from the bottom (4100-4,200 US dollars/ounce) in the past two weeks. More specifically:
1) In terms of ETFs (investment attributes): According to data from the World Gold Council, global gold ETF holdings increased net by 67 tons in September. Despite a month-on-month decline (net increase of 120 tons in August) against the backdrop of increased expectations of the Federal Reserve's austerity, a net increase in positions was still recorded, and the three major regions of North America, Europe and Asia continued to increase their positions evenly, reflecting the resilience of investment demand that exceeded expectations. Although the actual yield on ten-year US bonds rose from 2.44% at the end of August to 2.93% at the end of September, on the one hand, the US-Iran conflict was difficult to resolve, and high oil prices boosted medium-term inflation expectations (compared to 2.4% in April, the IMF revised the forecast for US CPI growth in 2027 to 2.8% in October); on the other hand, concerns about US employment resilience still exist (the US added 29,000 new non-farm payrolls, 90,000 people, far lower than market expectations. The previous value was revised down from 162,000 to 133,000. The Federal Reserve raised interest rates in October and December Expectations). Real interest rate expectations are unspeakably rising, helping to maintain strong investment demand for gold.
2) In terms of central bank purchases (monetary attributes): According to data from the People's Bank of China, China's central bank's net purchase volume in September was 740,000 ounces (about 23 tons), continuing to increase 90,000 ounces over the previous month, setting a new high level in a single month since the current round of gold purchases. Since the price of gold fell below 5,000 US dollars/ounce in March, China's central bank's net purchase volume in a single month has shown a continuous increase, from 160,000 ounces in March to 740,000 ounces in September. Considering that the overall demand for gold purchases represented by China's central bank in history has shown strong forwardness and inertia, the bank believes that the central bank's gold purchases and their supporting role in gold prices are still expected to remain at a high level.
Gold prices may be at the bottom, and the gold sector is expected to take the lead.
In terms of gold prices, one is that ETF and central bank gold purchases may have brought about a bottom rise in gold prices. Second, the outlook for gold prices remains positive. If the US-Iran conflict is suspended before the US midterm elections, the improvement in oil price expectations will create a predictable window period for easing market austerity expectations. US bond yields will rise or ease, whether in terms of liquidity (reduction in futures sales) or liquidity expectations (continued ETF buying).
In terms of the gold sector, looking downward, with reference to the bottom of the gold price of 4,000 US dollars/ounce in 2026 at the end of June, the bank estimates that the PE of the gold sector bottomed out at around 15x. The current 2026/2027 PE is 15x/12x under the assumption of 4,200 US dollars/ounce, and the valuation bottom is expected to be verified again. Looking up, gold stocks usually rebound ahead of the gold price rebound, similar to the July gold price bottoming out, but the CITIC Gold Index has rebounded more than 20% from the bottom, so if the current gold price stabilizes, it will be an important sign of a rebound in the gold sector.
Risk factors: the situation in the Middle East evolved beyond expectations; expectations of the Federal Reserve's interest rate hike continued to heat up; the US midterm elections evolved beyond expectations; corporate output growth fell short of expectations and cost growth exceeded expectations due to issues such as mine safety and environmental protection; operational risk of gold mining companies' overseas assets, etc.