Due to Federal Reserve Chairman Powell's dovish remarks and a series of favorable economic data, the price of gold futures rose back to 2,360 US dollars yesterday. At the same time, analysts said that the “Trump deal” would push global investors to switch to gold. According to Citi, next year's gold price is expected to hit the $3,000 mark.

Powell talks about the progress of inflation to bring interest rate cuts back into perspective

Powell spoke at the ECB meeting in Portugal on Tuesday. Regarding inflation, Powell said that the downward trend in inflation shows signs of recovery. “We have made considerable progress on inflation, and we are back on the path of falling inflation.” But he pointed out, “We need more confidence before lowering policy interest rates; we need to see more data like what we've seen recently. The data shows that we have made significant progress. If the labor market is unexpectedly weak, this will also cause us to react. We are capable of taking it slow and making the right decisions.”

Powell said that it is generally more difficult to reduce inflation in the service sector, and some service sector inflation is catch-up inflation. Inflation is likely to return to 2% by the end of next year or the year after. He added that the risk of inflation is that (we) move too fast; the other risk is that we wait too long and the labor market weakens.

Nick Timiraos, a reporter for the Wall Street Journal and known as the “Federal Reserve's microphone,” wrote that Federal Reserve Chairman Powell brought interest rate cuts back into view. Powell's speech highlighted a cautious optimism that subsided after the release of disappointing inflation data in April.

“Small farmers”, initial demand data, and PMI have successively boosted gold prices

It was announced yesterday that the number of ADP jobs in the US increased by 150,000 in June, which is lower than the expected increase of 163,000. ADP chief economist Nela Richardson said in a statement, “Employment growth has been steady, but not widespread. June would be a disheartening month if it weren't for the rebound in recruitment in the leisure and hospitality industry.”

The number of jobless claims announced at the beginning of last week also rose to 238,000, higher than the forecast of 235,000, which indicates that it will take longer for unemployed Americans to find work. The number of people who continue to claim unemployment benefits increased to 1.86 million, the highest level since November 2021.

Meanwhile, ISM's non-manufacturing PMI data for June also fell short of market expectations. Analysts pointed out that the US service sector experienced the fastest contraction in 4 years in June due to a sharp contraction in commercial activity and a decrease in orders. The US ISM non-manufacturing PMI recorded 48.8 in June, far lower than expected. These figures showed a sudden and significant reversal from the previous month, when the index rose to a 9-month high. The deterioration in the service sector index in June also further proved that the economy is showing more signs of losing momentum.

Affected by the above data, yesterday$Gold Futures(AUG4) (GCmain.US)$It closed up 1.15% and stood at $2,360.

“Trump 2.0” is probably approaching! Analysts say gold will be the direct beneficiary

Precious metals analysts at Heraeus (Heraeus) said the prospect of Trump's victory in November could push global investors to turn to gold, and both gold and silver prices would benefit from tariffs and trade disputes.

Heraeus pointed out that restarting the trade war could damage the US and the global economy. A Peterson Institute (Peterson Institute) document found that these proposed tariff policies could lead to a 1.8 percent drop in US GDP and a sharp increase in the inflation rate. This assessment does not take into account the “retaliatory tariffs” that other countries will almost certainly implement.

Analysts pointed out that the 2018-2020 trade war coincided with the rise in gold prices. They said, “During this period, due to protracted negotiations, combined with tariffs and geopolitical escalations, investors sought gold as a safe-haven asset. At that time, gold appreciation was closely related to increased tariffs. At that time, global ETF gold holdings increased from 71 million ounces at the end of 2017 to 86 million ounces at the end of 2019, and US spot gold ETF holdings increased from 37 million ounces to 44 million ounces.

Heraeus is concerned that Trump may also destroy the independence of the Federal Reserve because during his first term as president, he publicly criticized Federal Reserve Chairman Powell for raising interest rates several times.

They said, “The Trump campaign's unofficial proposals include undermining the independence of the Federal Reserve and possibly dismissing Powell early. Trump is likely to replace Powell with a dovish candidate after his 2026 term ends. In addition, Trump is likely to appoint a number of directors to the FOMC who are in favor of loose monetary policy.”

They added, “A more dovish FOMC will speed up interest rate cuts and ease control over inflation, thereby weakening the dollar and increasing investors' demand for gold. Furthermore, any move by Trump towards the Federal Reserve could shake the market's confidence in US monetary policy, which will further boost the price of gold.”

Citi expects gold prices to hit the $3,000 mark next year

Looking ahead to the future trend of the gold market, Citibank analyst Maximilian J Layton and others proposed a new fundamental analysis framework in the report released this week. They believe that the share of investment demand in gold mining supply is the main driving factor in gold pricing. Over the past two years, central bank investment demand has continued to increase, accounting for the majority of mine supply and driving the price of gold to continue to rise. It is expected that future market central bank purchases can support 25 to 3000 US dollars in gold prices.

Citi pointed out that the next round of investment demand and price increases will come from the normalization of US interest rates (Citigroup's US economic team believes that the Federal Reserve will cut interest rates 8 times in a row starting in September), particularly driving up demand for ETFs. Supported by factors such as de-dollarization, it is expected that the wave of gold purchases by central banks around the world will continue.

Gold ETF targets

Since the stock price of gold stocks is not only affected by the price of gold, it will also not be completely synchronized with fluctuations in gold prices due to factors such as the company's performance. If you are investing because you are optimistic about the price of gold, in addition to gold stocks, gold ETFs are also a good choice. Here are some gold ETFs from US stocks and Hong Kong stocks for everyone to choose from:

• Gold ETF on US stocks

1.$SPDR Gold ETF (GLD.US)$: This is the world's largest gold ETF, providing investors with an opportunity to track the spot price of gold.

2,$Gold Trust Ishares (IAU.US)$: This is also a large gold ETF, which tracks the market value of gold.

3.$VanEck Gold Miners Equity ETF (GDX.US)$: This ETF invests in a range of gold mining companies around the world, rather than directly investing in gold.

4.$VanEck Junior Gold Miners ETF (GDXJ.US)$: Similar to GDX, GDXJ invests in small to medium-sized global gold mining companies.

• Gold ETF on Hong Kong stocks

1.$SPDR Gold Trust (02840.HK)$: This is a gold ETF listed on the Hong Kong Stock Exchange. GLD is a sister fund to the US stock market. The purpose is to track the price of gold.

2,$Value Gold ETF (03081.HK)$: This is another gold ETF listed on the Hong Kong Stock Exchange. It tracks the price of gold in the London gold market.

In addition to this, there are still other gold ETFs on the market for investors to choose from. Bulls can check them by clicking Market>ETF>Themed ETF>Gold ETF~

Editor/Jeffy