Zhongtong Finance APP learned that Dongbei Securities released a research report stating that under the background of the current interest rate cut cycle truly opening + the slowdown of the US economy, overseas funds are noticeably more positive towards gold. The Fed's strategy belongs to 'slightly lagging behind but closely following the curve', by adjusting the pace of interest rate cuts, striving to control the economy within a narrower range of volatility. In terms of direction, the economy will not always be in low volatility range trading. Whether the interest rate cut is slow, leading to an economic slowdown, or too fast, leading to an inflation rebound, at this stage, it can actually become the logical basis for the upward trend of gold prices, and continue to be bullish on the medium-term trend of gold prices. In addition, the interest rate cut combined with fundamental factors is driving copper prices higher, maintaining a positive outlook on the value of copper mining stocks.

Gold: The interest rate cut cycle has started, accelerating overseas replenishment, with London Gold breaking above 2600. This Friday, the London Gold closing price is $2621.74 per ounce, with a weekly increase of 1.7%.

1) Overseas actively replenishing, pushing gold prices continuously higher: in the rise of gold prices in the first half of 2023 and 2024, central bank gold purchases + the influx of Chinese incremental funds are key variables, while overseas willingness to hold gold continues to weaken, which is an important reason for the divergence between gold prices and actual interest rate frameworks; and against the background of the current interest rate cut cycle truly opening + the slowdown of the US economy, overseas funds are noticeably more positive towards gold: as of 9/20, SPDR Gold holdings were 875.4 tons, up by around 48 tons since early July, as of 9/17, COMEX non-commercial net long positions were 0.31 million contracts, up by 0.069 million contracts since early July, and both have continued to rise significantly this week.

2) How to view the pace of Fed's subsequent interest rate cuts? The September FOMC meeting saw the Fed cut rates by 50 basis points, with a significant move to start a new round of rate cuts. Powell explained the 50bp rate cut at the press conference as 'this is a commitment that is not falling behind the curve', which can be simply understood as the rate cut should have started in July (the unemployment rate worsened in July but the Fed did not see the data), so the larger rate cut in September is compensatory, but it does not mean that 50bp is the new pace. On the evening of 9/20, Fed official Bullard provided more specific insights: if the data is good, the next one or two meetings will see a 25bp rate cut (consistent with the remaining 25-50bp guidance on the dot plot); if employment deteriorates, considering another 50bp cut; if inflation data reverses, there may be a pause in the rate cuts, still following a policy path of 'step by step'. In this strategy, the Fed actually belongs to 'slightly lagging behind but closely following the curve', adjusting the pace of interest rate cuts to actively control the economy within a narrower range of volatility. However, in terms of direction, the economy will not always be in low volatility range trading. Whether the interest rate cut is slow, leading to an economic slowdown, or too fast, leading to an inflation rebound, at this stage, it can actually be the logical basis for the upward trend of gold prices, continuously fueling buying support for gold (although it may bring differences in the pace of gold prices), being confident, patient, and continuing to be bullish on the medium-term trend of gold prices. In the long term, against the backdrop of global currency devaluation, geopolitical conflicts, and increasing economic uncertainties, the value of gold allocation is highlighted.

Related symbols: Zijin Mining (601899.SH), Shandong Gold (600547.SH), Yintai Gold (000975.SZ), Chifeng Jilong Gold (600988.SH), Hunan Gold (002155.SZ), Zhongjin Gold (600489.SH), Western Region Gold (601069.SH), Zhaojin Mining (01818), Shandong Humon Smelting (002237.SZ), Pengxin International Mining (600490.SH), etc.

Copper: Interest rate cuts combined with fundamental factors help drive copper prices higher, maintaining a positive outlook on the value of copper mining stocks. 1) A 50bp interest rate cut catalyzes the upward movement of copper prices: the Fed's 50bp rate cut strengthens expectations of a soft landing, with non-commercial net long positions in COMEX copper rising by +3.3% to 9.6% on a week-on-week basis until Tuesday, with long positions increasing and short positions decreasing by 1.9% and 1.4%, respectively. This week, LME copper rose by 2.9% to $9486 per ton. 2) Fundamentals provide support, destocking as expected, copper prices are expected to continue to perform strongly: The inventory of the three major exchanges and domestic social inventories have already decreased by 0.094 million tons and 0.084 million tons respectively since early September, entering an apparent destocking period. On the supply side, the tight situation in the mining sector remains unchanged + a reduction in scrap copper; on the demand side, downstream 'buy-rise' bids are strong, with SMM spot premiums continuing to rise to 90 yuan per ton, pre-holiday stocking behavior is expected to accelerate visible inventory destocking. 3) With the center of copper prices trending up, the value of copper mine equity allocation is maintained: assuming a soft landing, it is difficult for the central trend of copper prices to decline significantly, the long-term logic is unchanged, the center of copper prices is trending up, emphasizing the value of equity allocation.

Related symbols: zijin mining group (601899.SH), cmoc group limited (603993.SH), western mining (601168.SH), jiangxi copper (600362.SH), jchx mining management (603979.SH), tongling nonferrous metals group (000630.SZ), mmg (01208) and so on.

Risk warning: the US inflation continues to exceed expectations, global monetary tightening exceeds expectations, and the appreciation of the US dollar.