Dabon Securities: New growth opportunities open, interest rate cuts expected to continue to boost gold prices

Debon Securities released a research report stating that with the recent Fed rate cut, if there are no new catalysts in the short term, the price of gold is expected to fluctuate around $2600 per ounce. Historically, during rate cut cycles, the price of gold tends to rise. Based on calculations, using zero-interest bond perspective, the average modified duration of gold from February 2000 to June 2024 is 56, with an average convexity of 88033; the results of the second regression are y=0+(-11.4251)*x^1+(14.3731)*x^2. These parameters can provide a reference for the degree of change in gold prices during future rate cuts, potentially opening up new upward space for gold. 50bp rate cut exceeded market expectations, future expectations expanded Looking at the current rate cut situation, this 50bp rate cut exceeded market expectations, and the Fed's statement indicated increased confidence in inflation, aiming for 2%, lowering the US GDP growth forecast for 2024 to 2.0%, lowering the core PCE inflation forecast for 2024 to 2.6%, and raising the unemployment rate forecast for 2024 to 4.4%. Looking at future rate cut expectations, Fed policymakers expect the federal funds rate to be 4.4% at the end of 2024, previously estimated at 5.1% in June; the federal funds rate is expected to be 3.4% at the end of 2025, previously estimated at 4.1% in June; and predicted to be 2.9% at the end of 2026 and 2027, previously estimated at 3.1% and 2.8% in June, respectively. Gold price reaches $2600 as expected, awaiting emotional adjustment Debon Securities stated that the Fed rate cut marks the beginning of a change in US monetary policy. With the Fed rate cut taking effect, the price of gold may converge towards $2600. However, on the other hand, the London gold price quickly fell back after reaching $2600, closing at around $2560 per ounce on the 19th. The unexpected rate cut brought some selling pressure. As of September 10, 2024, COMEX gold net long positions were around 24231 contracts, close to levels before the Fed rate cut in 2022. Recommended targets: Zijin Mining Group(601899.SH), Shandong Gold Mining(600547.SH), Chifeng Jilong Gold Mining(600988.SH), Shandong Gold(601028.SH), Hunan Gold Corporation(002155.SZ), Shandong Humon Smelting(002237.SZ), etc. Risk warning: Significant increase in global gold production, large-scale exploration discoveries of easy-to-extract gold resources, and unexpected changes in US monetary policy.