Chinese goldbugs swarm to stocks of miners and jewellers as bullion prices surge on rate cut view and haven demand
- Stocks of gold producers and jewellers post sharp gains following a surge in demand for bullion from investors and central banks
- Gold prices could remain elevated as uncertainty swirls due to ongoing wars, upcoming US elections and the current interest rate environment
Sichuan Rongda Gold jumped 10 per cent to hit the daily limit set by the exchange to 26.08 yuan in Shenzhen, taking its total gain this month to 16 per cent. Zijin Mining Group, China’s biggest gold producer by market value, rose almost 4 per cent to 14.73 yuan in Shanghai, for a 12 per cent gain in March, while Shandong Gold Mining, the second largest, rallied 3 per cent to 25.39 yuan, for an aggregate 17 per cent gain this month.
In Hong Kong, Zijin Ming’s offshore stock surged 3.3 per cent to HK$14.56 and Chow Tai Fook Jewellery Group, which derived 93 per cent of its sales from mainland China last year, added 0.7 per cent to HK$11.54.
The bull stampede follows gold’s record price of US$2,152.25 an ounce struck overnight, eclipsing the previous high of US$2,135.39 set on December 4. US Federal Reserve chair Jerome Powell’s testimony to the Capitol Hill has inspired bets of a cut in borrowing costs in June, with the governor of the world’s biggest central saying it would be appropriate to reduce the interest rate “at some point this year”, although there is no rush to do so.
A low-interest-rate environment favours non-interest-bearing precious metals like gold, whose prices move inversely with the US dollar and Treasury yields, analysts say.