① Why did Lingbao Gold drop so much? ② What does the market think of subsequent gold prices?
Financial Services Association, April 18 (Editor: Hu Jiarong) Most gold stocks declined today due to some individual stock allocations and consolidation of international gold price trends. Lingbao Gold (03330.HK), Shandong Gold (01787.HK), and Zhaojin Mining (01818.HK) fell 5%, 2.53%, and 2.05% respectively.
Note: Performance of gold stocks
Judging from the chart, Lingbao Gold had the highest decline. The company's decline was linked to its announcement yesterday.
According to the announcement, Lingbao Gold plans to place a maximum of 26.916,800 shares, equivalent to about 2.16% of the number of issued shares. The placement price for each share is HK$3.02, a discount of about 16.11% from the closing price of HK$3.6 yesterday (17th). The announcement also indicated that the net funding is estimated at about HK$79.3 million, which is intended to be used to purchase gold concentrate for the production of gold bars.
Note: Lingbao Gold's announcement
In addition to Lingbao Gold's allotment of shares, market expectations for the Fed's interest rate cut have continued to decline recently. For example, Federal Reserve Chairman Powell said on Tuesday that before the Fed starts cutting interest rates, policymakers need to see more progress in reducing inflation. This hawkish rhetoric has further dampened market expectations for interest rate cuts this year. This move also suppresses the trend of international gold prices.
Judging from recent trends, the trend of COMEX gold has remained volatile since it surged to 2448.8 US dollars last Friday. At press time, it was down 0.17% to $2384.2.
Note: COMEX Gold's recent performance
Institutions raise expectations for gold prices
Regarding the subsequent trend in gold prices, Wells Fargo Investment Research Institute pointed out that there is still room for gold to rise after reaching a record high this year because “changes in the Federal Reserve's interest rate path may become a particularly strong tailwind.”
Analysts said in an April 15 report that if the Federal Reserve is convinced that the US inflation rate will continue to fall to the 2% target, it may cut interest rates later this year. This is “no secret”, but what is “not well known” is that the strongest performance of gold in the past often occurred during the Fed's interest rate cut cycle.” Data from Wells Fargo shows that historically, within 24 months after the Federal Reserve began cutting interest rates, the price of gold rose by an average of 20%.
Themes ETFS investment strategist Taylor Krystkowiak said in an interview on Wednesday: Even if “some hopes of the Federal Reserve's policy adjustments have been dashed,” gold may continue to rise if investors continue to hedge against the possibility of a return in inflation. “People will see gold as a way to hedge against the Fed's mistakes,” he added.