作者 | 中信建投期货研究发展部 田亚雄
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本报告完成时间 | 2025年01月21日
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Key takeaways
Historically, Asian investors have tended to purchase gold during dips, but lately, they have been following market trends. Notably, there has been significant AUM growth in both Indian and Chinese gold ETF. Maybe the market share is quite small compared to US and Europe, but it is promising.
ETF holdings is still about 10% below the peak in 2020, on the contrary COMEX net long positioning as a proxy to estimate implied gold investment is still high
Based on instances, Asian investors have followed the uptrend, resurface of PBoC gold purchasing activities may trigger ETF holding demand, especially the EU investors.Asia makes up more than 60% of annual demand for gold (excluding central banks). Its contribution to performance can't be understated. More generally, China is one of gold's largest markets.
In face of trade tensions amid Trump's MAGA 2.0, CNY might weaken in the near term , amid rising trade & tariff risks, the gold owning appetite probably remains strong for Chinese Retail Consumers.CNY devaluations have coincided with strong Chinese gold import demand including in 2015/16, over trade war 1.0 in 2018 and over 2022 which triggered the PBOC's most recent buying spree. given there are quite a lot forecasts for the CNY to weaken to 7.5 by 2Q25.
Overall, a more hawkish Fed will put further pressure on investment demand. The current dollar strength, fueled by hawkish sentiments, is continually diminishing the length and depth of this Federal Reserve interest rate cutting cycle. However, this market consensus is likely to face challenges.
Gold is likely to remain rangebound if existing market expectations are correct. However, a combination of higher rates and lower economic growth could negatively affect investors and consumers. This could be particularly evident in Asia. Conversely, significantly lower interest rates, or a deterioration in geopolitics or financial market conditions will improve gold's performance. And all these above shows the rate cutting cycle of US is dominant
Hawkish Fed spurs profit-taking but also signals interest rate uncertainty. Interest rate uncertainty is also reflected in the elevated level of expected(implied) bond volatility. Interest rate uncertainty should favor gold relative to bonds as it raises their associated premia, which is one of reason for the market performance.
Maintaining low inflation and achieving a soft landing is a formidable task. The latest data indicates that core inflation in the United States has declined, and the U.S. PMI index also suggests that economic resilience is not as pronounced.
Once soft-landing is proved hard to achieve, the 50 basis points for interest rate decrease is too little, which may create good ground for gold.
Recent history shows us that gold can still rise when yields are rising too, but falling yields are almost always associated with rising gold prices. The relationship between price and its drivers is likely to evolve again in the future, as it has done historically,On Trump's inauguration day, global tariffs were not widely discussed, leading to a decline in American exceptionalism, a weakening of the US dollar, and an appreciation of the Chinese yuan.
It's worth noting that many of the above logics and narratives have been exposed to the market for a long time and are therefore likely already priced in. As this is a market of traders, or a market driven more by sentiment than fundamentals, we need to have a deep understanding of the market's rhythm[ˈrɪðəm] and have a more flexable attitude towards forecasting.
