As geopolitical tensions intensify, the international gold price approaches historic highs.

Spot gold once touched the $2460/ounce mark; COMEX gold futures closed up 1.62% at $2513.4/ounce, approaching the historical high of $2537.70 set on July 17.

In response to this news, Hong Kong A-shares of gold stocks became active in midday trading. In the Hong Kong Stock Exchange, Shandong Gold rose 2.14%, while Zhaojin Mining, Zijin Mining, and China National Gold followed suit.

In the A-share market, *ST Zhongrun and Beijing Xiaocheng Technology rose over 3%, Zhongjin Gold rose 1.19%, and Yulong Gold, Sichuan Gold, Hunan Gold, and Western Region Gold followed suit.

Central banks around the world increased their gold holdings by 483 tons in the first half of the year.

The latest statistical results from the World Gold Council show that in the first half of this year, central banks around the world increased their gold holdings by 5% year-on-year, reaching a new high for the same period in history, with a total of 483 tons.

In the first half of the year, central banks in emerging markets remained the main force in buying gold.

The Turkey's central bank increased its gold reserves by 45 tons, becoming the largest buyer; the Indian central bank purchased 37 tons, ranking second; and the Chinese central bank ranked third, increasing its gold holdings by 30 tons.

In addition, the pace of global central bank purchases of gold slowed in the second quarter due to the continued rise in gold prices. Although the total purchasing and sales volumes have both declined compared with the same period last year, the trend of purchasing gold in 2024 is still continuing.

Since May, the central bank of China has suspended its gold purchases for three consecutive months. As of the end of July, China's gold reserves stood at 72.8 million ounces (about 2264 tons).

Meanwhile, global physical gold ETFs have seen inflows for the third consecutive month. In July, global physical gold ETFs saw inflows of $3.7 billion, the strongest monthly performance since April 2022, with the largest inflows coming from Western markets.

The World Gold Council said that recent fund inflows and rising gold prices pushed the total assets managed by global gold ETFs to $246 billion, with the total holdings rebounding to 3154 tons, the highest since January.

In addition, in terms of trading volume, global gold market trading increased in July. The average daily turnover of the global gold market in July was $250 billion, an increase of 27% month-on-month, much higher than the average daily trading volume of $163 billion in 2023.

Continued bullish on gold allocation under interest rate cut cycle.

Industry insiders pointed out that as the major central banks in the world are about to enter an interest rate cut cycle, the performance of gold may continue to be good in the coming one or two years.

From the data, the weakness of the US dollar is the main reason for the strength of gold, but this relationship has gradually weakened in recent years. Of course, the interest rates and the dollar of the United States are still important driving factors for the price of gold, but now the demand of central banks in emerging markets and the overall market has become more and more important driving factors for the price of gold.

The latest CME's "Fed Watch" shows that the probability of a 25 basis point rate cut by the Fed in September is 52%, and the probability of a 50 basis point rate cut is 48%. The probability of cumulative rate cuts by the Fed by November is 35.6% for 50 basis points, 49.3% for 75 basis points, and 15.1% for 100 basis points.

On August 12, local time, John Kirby, the spokesperson for the U.S. National Security Council, said that Iran may launch a "major" attack on Israel this week. Many believe that Iran's attack on Israel is imminent.

The World Gold Council pointed out in its latest comment on August 8 that for gold, the increase in uncertainty and (political) event risks may continue to keep investors interested in it.

For the US presidential election, gold may benefit more from the uncertainty of the election. For example, in July, Donald Trump, the Republican candidate for the 2024 US president, was assassinated, and Joe Biden, the Democratic candidate, withdrew from the presidential race. At both of these time points, gold ETFs saw capital inflows, indicating increased demand for safe-haven assets.
After the election, investors may shift their focus back to the US government debt and deficit levels, which will keep their interest in gold at a high level.

Citic Securities stated that the long-term gold price is essentially a currency in the counter-globalization cycle, which is clearly bullish due to the worsening geopolitical risks, the clear trend of central bank gold purchases, and the continuous growth of the US deficit. In the short to medium term, the rate cut expectation trade is coming to an end. The trend of the US economy and the results of the US election after the rate cut by the Federal Reserve will determine whether gold can continue to rise.

Guangda Futures also stated that the tense geopolitical situation in the Middle East has pushed up market risk aversion sentiment and led to the spike in gold prices. In terms of US economic data, the New York Fed's July consumer survey showed that consumer 1-year and 5-year inflation expectations remained stable at 3.0% and 2.8%, but 3-year inflation expectations fell sharply to 2.3%, hitting a new historical low. Market expectations of a downward revision in PPI on Tuesday and CPI on Wednesday may further drive down the US dollar index and boost gold prices.