Huaxi Securities: Gold Prices Expected to Stabilize and Rebound, Watch Gold Jewelry Sector Recovery

Huaxi Securities Research said that the short-term gold price rebound is driven by expectation correction and sentiment, but the medium- and long-term support logic remains solid—the wave of central bank gold buying, the de-dollarization trend, and expectations of a decline in U.S. real interest rates constitute the "bottom-line support" for gold prices. Standard Chartered Bank expects gold prices to head back toward the $5,000 level. The stabilization and rebound of gold prices are expected to gradually repair the fundamentals and valuation of the gold jewelry sector: in the first half of the year, sharp gold price fluctuations caused Q2 domestic gold jewelry demand to be only 50 tons (down 28% year on year), and consumers' "buying high rather than low" mentality suppressed terminal sales. However, as gold prices stabilize and rebound, previously suppressed consumption demand is expected to gradually release, and the performance of leading companies in the second half of the year is expected to stabilize and recover. The report recommends focusing on the stock price repair opportunities of leading individual stocks.

Gold prices rebounded strongly, with COMEX gold rising more than 7% in a single week to return to $4,400, and Shanghai gold back above 900 yuan per gram.

This week, international gold prices ushered in a strong rebound. COMEX gold futures once rose above $4,400 per ounce, hitting a new high since mid-June, with a weekly gain of more than 7%; the main Shanghai gold contract returned to above 900 yuan per gram, with AU9999 spot closing at about 930 yuan per gram, and domestic branded gold jewelry retail prices adjusted up by about 60 yuan per gram in a single day.

The report believes that this round of rebound is driven by the resonance of multiple positive factors: the unexpected decrease of 23,000 in U.S. July non-farm employment, with ADP only increasing by 44,000, a new low for the year, significantly cooling market expectations of a Fed rate hike in September; signals of easing in the Middle East situation, with rising expectations of a navigation agreement for the Strait of Hormuz, falling oil prices alleviating inflation concerns; and global central banks' net gold purchases of 289 tons in the second quarter (up 62% year on year), with the People's Bank of China continuously increasing gold reserves for 20 months, and the Bank of Korea resuming gold purchases after 13 years, providing structural buying support for gold prices.

The stabilization and rebound of gold prices is expected to repair the valuation of the gold jewelry sector, focusing on the recovery of terminal sales and earnings elasticity.

Huaxi Securities believes that short-term gold price rebound is driven by expectation correction and sentiment, but the medium- and long-term support logic remains solid—the wave of central bank gold buying, the de-dollarization trend, and expectations of a decline in U.S. real interest rates constitute the "bottom-line support" for gold prices. Standard Chartered Bank expects gold prices to head back toward the $5,000 level. As gold prices stabilize and rebound, the previously suppressed consumption demand is expected to gradually release, and the performance of leading companies in the second half of the year is expected to stabilize and recover. It is recommended to focus on the stock price repair market of leading individual stocks.