Gold prices fall due to interest rate gloom and Middle East tensions. US Fed and major central banks likely to maintain current interest rates. Long-term gold outlook positive, seen as a hedge against risks.

Right now the price of gold sits around $5,100 an ounce, which is double where it sat just over one year ago. And the war in Iran could propel the price upwards even further.

After a strong start, the price of gold slipped twice to around $5,060 during this trading week. Now, it appears that gold prices might manage to stay just above $5,100 heading into the weekend, continuing the persistent sideways movement of the past five weeks.

Gold surged during the 12-day war with Iran last year and then gave up its gains when a ceasefire was announced. But, two weeks into the latest conflict, its price remains largely unmoved.

Geopolitical tensions, and concerns about fiscal policy and central banks, have driven the gold price to where it is today.

Precious metals are having a moment. Gold and silver surged to record highs in January, benefiting from an alignment of macroeconomic factors, evolving supply-demand dynamics, and renewed industrial demand.

Commerzbank’s Carsten Fritsch highlights extreme volatility in Gold and Silver, with sharp swings over consecutive days and record-high nominal prices.

An investor asked on the investor interaction platform: "Dear Secretary to the Board, can the rare earth minerals and rare earth refining products of your company be sold directly overseas?" Chifeng Gold (600988.SH) stated on the investor interaction platform on May 27 that the customers for the rare earth products of Chixia Mining (Laos) Co., Ltd., a subsidiary controlled by the company, are determined through bidding. Chifeng Gold stated on the investor interaction platform on May 12 that a very small portion of the equipment and materials involved in the company's global procurement business are imported from the US to its overseas mine subsidiaries in Laos and Ghana, and do not involve mines within China. The average annual total value of imports from the US by the company's two overseas subsidiaries is relatively small, accounting for no more than 0.1% of the company's total procurement. According to Chifeng Gold's Q1 report, in the first quarter of this year, the company's operating revenue reached 2.407 billion yuan, up 29.85% YoY. The net profit attributable to shareholders of the publicly listed firm was 483 million yuan, up a substantial 141.10% YoY. The net profit excluding non-recurring gains and losses also rose significantly to 488 million yuan, with a YoY increase of 138.58%. Chifeng Gold's 2024 annual report shows that in 2024, the company achieved a total operating revenue of 9.026 billion yuan, up 24.99% YoY, and a net profit attributable to shareholders of 1.764 billion yuan, up 119.46% YoY. The company's proposed 2024 dividend distribution plan is to distribute a cash dividend of 1.6 yuan (tax included) per 10 shares to all shareholders. Huayuan Securities issued a research report on April 30, giving Chifeng Gold a "Buy" rating. The main reasons for the rating include: 1) a significant increase in unit selling prices; 2) a slight decline in production and sales volumes; 3) a notable decrease in costs at domestic mines, while costs at overseas mines increased significantly due to low head grades and equipment upgrades. Risk warnings: demand volatility risk; risk of project construction falling short of expectations; risk of metal price fluctuations; political risks in the countries where projects are located. Minsheng Securities issued a research report on April 28, giving Chifeng Gold a "Recommend" rating. The main reasons for the rating include: 1) Event: The company released its Q1 report for 2025; 2) Commentary: A slight decrease in production, with a notable increase in costs at the Wassa mine; 3) Key highlights: Accelerated progress in key projects driving capacity expansion. Risk warnings: significant volatility in metal prices, project progress falling short of expectations, overseas geopolitical risks, etc. Hua'an Securities issued a research report on April 7, giving Chifeng Gold a "Buy" rating. The main reasons for the rating include: 1) Chifeng Gold released its 2024 annual report; 2) Both the volume and price of gold increased, driving performance growth; 3) The company has the potential for continuous expansion of production and reserves. Risk warnings: US policy uncertainty may lead to volatile gold prices; project construction may fall short of expectations; mine safety and environmental protection risks, etc.

At 15:00 Beijing time on Monday, the Ministry of Commerce of China issued a joint statement on the US-China Geneva Economic and Trade Talks. This significant statement indicated that both sides committed to taking a series of measures before May 14, 2025, including revising and rescinding additional tariffs imposed on each other's goods, as well as suspending or rescinding non-tariff countermeasures. Additionally, both sides will establish mechanisms to continue consultations on economic and trade relations, possibly in the US, China, or a third country. The spokesperson for the Ministry of Commerce of China stated that the US committed to rescinding a total of 91% of the additional tariffs imposed on Chinese goods under Executive Order 14259 of April 8, 2025, and Executive Order 14266 of April 9, 2025, and revising the 34% reciprocal tariffs imposed on Chinese goods under Executive Order 14257 of April 2, 2025. Among these, the imposition of 24% of the tariffs will be suspended for 90 days, while the remaining 10% will be retained. Correspondingly, China will rescind a total of 91% of the counter-tariffs imposed on US goods. For the 34% counter-tariffs imposed in response to US reciprocal tariffs, the imposition of 24% of the tariffs will be suspended for 90 days, while the remaining 10% will be retained. China will also suspend or rescind non-tariff countermeasures against the US accordingly. Upon the release of this news, global financial markets immediately became volatile. The Hong Kong stock market surged significantly, US stock index futures also rose rapidly, while gold prices fell sharply. In the foreign exchange market, the US dollar index surged, and the offshore RMB also strengthened significantly against the US dollar. Global assets responded swiftly. After the joint statement on the US-China Geneva Economic and Trade Talks was issued at 15:00 Beijing time, the gains in the Hong Kong stock market expanded rapidly. By the close of trading, the Hang Seng Index closed up 2.98%, and the Hang Seng Tech Index soared 5.16%, with Sunny Optical Technology, BYD Electronic, XPeng Motors, and others leading the gains. The US stock market was also in high spirits. As of press time, the S&P 500 index futures surged 2.51%, the Nasdaq 100 index futures soared 3.37%, and the Dow Jones index futures rose 1.89%. The VIX index futures, known as the "fear index," plunged 7.39%, indicating a significant easing of people's concerns. The price of gold, a safe-haven asset that had previously surged due to the US-China trade war, fell sharply. As of press time, gold futures fell 3.51% intraday to $3,226.49 per ounce, breaking below the previous low of the phase on May 1 and hitting a new low since April 14. As market sentiment eased, the US dollar rebounded significantly. As of press time, the US dollar index rose 1.26% intraday, hitting a new high since April 10. The offshore RMB also strengthened, rising 0.39% against the US dollar to 7.2108 RMB per US dollar as of press time. The yield on the 10-year US Treasury note rose by 1.44% during the day, hitting a new high since April 14. Market participants: Chinese stocks and the RMB are set to rise. Market participants and economists have given positive assessments of the joint statement issued at the China-US Geneva Economic and Trade Talks. ARNE PETIMEZAS, Research Director at AFS Group in Amsterdam, said, "The US has made such a dramatic 180-degree turn on the tariff issue, which is quite surprising... The market should rebound as a result ." WILLIAM XIN, Chairman of Shanghai Chunshan Pujiang Investment Management Co., Ltd., told the media, " The outcome far exceeded market expectations... Now, there is more certainty . Both the Chinese stock market and the RMB are set to rise over a period of time ."

In 2024, the performance of publicly listed firms in China's gold industry chain was characterized by robust growth in the upstream sector and a decline in the downstream sector. Benefiting from the sustained and significant increase in gold prices, the performance of gold mine-related publicly listed firms in the upstream sector of the gold industry chain surged in 2024. However, as gold prices continued to rise, consumer demand for gold jewelry was impacted, leading to a general decline in the performance of publicly listed firms in the downstream gold jewelry sector. Futures Daily reporters reviewed the annual reports of nine gold mine-related publicly listed firms and found that the performance of these firms surged across the board in 2024. Among them, Shandong Gold, the industry leader, achieved operating revenue of 82.518 billion yuan in 2024, up 39.21% YoY, and net profit attributable to shareholders of the publicly listed firm of 2.952 billion yuan, up 26.80% YoY. Chifeng Gold recorded the largest increase in net profit in 2024, up 119.46% YoY, and achieved operating revenue of 9.026 billion yuan, up 24.99% YoY. Both Western Gold and Xiaocheng Technology turned losses into profits in 2024. The significant growth in the performance of gold mine-related publicly listed firms in 2024 was attributed to the sharp increase in gold prices on the one hand, and the increase in the firms' gold production and sales on the other hand. Shandong Humon Smelting stated in its annual report that in 2024, the company achieved operating revenue of 75.801 billion yuan, up 15.59% from the same period last year, due to the increase in sales revenue from its main product, gold. Shandong Gold stated in its annual report that the main reason for the increase in the company's operating revenue in 2024 was the increase in the sales volume and selling price of both self-produced and externally purchased gold in the current period. Reporters found through reviewing annual reports that the gold production of many gold mine-related publicly listed firms increased in 2024. For example, Shandong Gold produced 46.17 mt of gold from its mines in 2024, up 4.39 mt or 10.51% YoY. Shandong Gold International achieved gold production of 8.04 mt in 2024, up 14.69% YoY. Chifeng Gold achieved gold production of 15.16 mt in 2024, up 5.60% YoY. While upstream enterprises in the gold industry chain were quietly reaping profits, publicly listed firms in the downstream gold jewelry sector, whose main business involves gold jewelry sales, were struggling, with a significant decline in performance. Lao Feng Xiang, a leading enterprise in the gold jewelry sector, disclosed its 2024 annual report recently, showing that the company achieved operating revenue of 56.793 billion yuan in 2024, down 20.50% YoY, and net profit attributable to shareholders of the publicly listed firm of 1.95 billion yuan, down 11.95% YoY. Lao Feng Xiang stated in its annual report that in 2024, the world economy lacked growth momentum, domestic effective demand was insufficient, and consumer spending was sluggish. Coupled with the sustained increase in gold prices, this led to weak consumption in the gold jewelry sector. Another leading publicly listed firm in the gold jewelry sector, China National Gold Group Corporation, also experienced a decline in net profit in 2024.Data shows that China National Gold Group Corporation achieved operating revenue of 60.464 billion yuan in 2024, up 7.27% YoY. Net profit attributable to shareholders of publicly listed firms was 818 million yuan, down 15.93% YoY. In its 2024 annual report, Chow Tai Seng, a publicly listed firm in the gold and jewelry sector, stated that during the reporting period, the uncertainty of the external economic environment increased significantly, and gold prices rose rapidly, further dampening consumers' enthusiasm for purchases and putting considerable pressure on the jewelry consumption market. In 2024, the company achieved cumulative operating revenue of 13.891 billion yuan, down 14.73% YoY. Among this, revenue from gold product sales was 7.717 billion yuan, down 24.34% YoY. In addition to the aforementioned companies, Mingr Jewelry, Darry Ring, and other companies in the gold and jewelry industry also reported a decline in net profit YoY in 2024. As gold prices continue to climb, significant changes have occurred in the gold industry. On the upstream smelting side, major gold mine publicly listed firms have all reported plans to increase production or expand capacity. However, in the downstream consumption sector, demand for gold jewelry has been suppressed. In Q1 2025, gold jewelry consumption decreased by 26.85% YoY, with some consumer demand shifting towards investment demand. This year, the total open interest in gold ETFs has increased significantly. "Currently, amidst the backdrop of increasing uncertainty in the global political and economic landscape, gold demand is expected to continue to maintain a robust trend," Shandong Gold Group pointed out in its 2024 annual report. Firstly, from an economic performance perspective, the new US administration's tariff hikes on foreign countries will trigger a new round of trade frictions, causing harm to the global economy. Meanwhile, the rising debt levels in the US may undermine the credit of the US dollar. Secondly, from a monetary policy perspective, tariff hikes on foreign countries may have a certain impact on the US economy while driving inflation to rebound. Therefore, it is expected that the US Fed will still cut interest rates, but the pace may slow down. Finally, from a geopolitical risk perspective, the "America First" policies planned by the US government will exacerbate tensions between major powers, and the global geopolitical situation may become more complex. It is expected that gold's role as a store of value and its hedging value in global asset allocation will further increase, and the gold industry will face better development opportunities. In its 2024 annual report, Western Gold pointed out that the structure of the future gold market will change. On the one hand, consumers' increasing preferences and requirements for the style, quality, and price of gold jewelry may subject the gold jewelry market to greater competitive pressure. This will prompt gold jewelry enterprises to increase product innovation and market expansion efforts to adapt to changes in market demand. On the other hand, the gold investment market will become more diversified and specialized. Sichuan Gold stated in its annual report that due to the interplay between international geopolitical turmoil and expectations for US Fed interest rate cuts, gold's status as a safe-haven asset has gradually become prominent, and it is expected that gold prices will fluctuate upward. The company will continue to monitor domestic and overseas macroeconomic conditions and political environments, enhance its comprehensive research and judgment capabilities on gold price trends, and improve the efficiency of spot price settlement. Through measures such as in-depth promotion of refined management and comprehensive budget management, the company aims to reduce unit production costs. Wu Zijie, a precious metals researcher at Jinrui Futures, holds a bullish view on medium and long-term gold prices. He believes that the core driving force behind the rise in gold prices is the growth in demand for physical gold, represented by continuous central bank gold purchases and ETF inflows. The underlying factors are the trend of de-dollarization, expectations for US Fed interest rate cuts, US debt issues, and geopolitical conflict risks. Although gold prices are currently at historical highs, investors can still consider gradually building positions in batches during pullbacks, adhering to the principle of "buying small amounts during minor declines and larger amounts during major declines," to avoid rushing to buy amid continuous price rise at high levels. For enterprises in related industries, they should conduct systematic hedging through financial instruments such as futures and options, establish a tiered risk management mechanism, control risk exposures in the process of raw material procurement and product sales, stabilize corporate operating profits, and avoid being impacted by sharp price fluctuations. Gu Jianan, Assistant General Manager of Haitong Futures Research Institute, believes that gold is still in a long-term upward trend, and its current price has not yet peaked. In the short term, considering Trump's signals for trade negotiations, global market risk appetite is expected to continue to rebound, and the upward trend in gold prices will temporarily come to an end. From a long-term perspective, Trump's tariff policies will further promote "de-globalization," and the strengthening of trade barriers will drive down the demand for US dollar settlements. As a non-sovereign credit anchor, gold's monetary attributes will drive its price to continue rising. "For investors, it is recommended to firmly adhere to the strategy of long-term gold holding and reduce speculative and leveraged operations. If there is a need to increase positions, it is advisable to wait for entry opportunities after pullbacks and avoid chasing highs. Related enterprises can utilize financial derivatives such as futures and options for hedging to lock in costs or profits. At the same time, optimize inventory management and adjust inventory levels based on market forecasts," said Gu Jianan. It is worth mentioning that many listed gold companies disclosed their use of financial derivatives for hedging in their 2024 annual reports. Shandong Gold stated in its 2024 annual report that during the reporting period, the company and its subsidiaries primarily conducted hedging businesses related to their main operations to ensure stable operating performance.The financial derivative contracts used by the company and its subsidiaries for hedging purposes are linked to products and foreign exchange related to the company's production and operation, thereby reducing the risk of price fluctuations, achieving the expected risk management objectives, and further enhancing the company's production and operation capabilities as well as its risk resistance. In its 2024 annual report, Western Gold stated that to ensure stable operating performance, the company primarily engages in hedging activities related to its main business. The gains and losses on the derivatives side and the spot side can be hedged against each other, reducing the risk of price fluctuations and further enhancing the company's production and operation capabilities as well as its risk resistance. During the reporting period, the combined profits from derivative transactions and changes in spot value amounted to 34.1965 million yuan.