Tracking Hong Kong stocks concept | The Federal Reserve cuts interest rates by 50 basis points more than expected! Spot gold breaks through $2600 to a historic high, opening up new upward space for gold (including concept stocks)

Eastern time on Wednesday, the FOMC meeting of the Federal Reserve will cut the federal funds rate target range by 50 basis points to 4.75% to 5.00%, the first rate cut since March 2020. Gold performed strongly after the Fed's September statement. At the end of trading in New York on Thursday (September 19), spot gold rose by 1.09% to $2586.74 per ounce, with a trading range of $2551.41 to $2594.90 within the day, approaching the historical high of $2600.16 set after the surprise 50 basis point rate cut announced by the Fed on Wednesday. Debon Securities stated that with the Fed's rate cut taking effect, if there are no new catalysts, they predict that the short-term gold price will fluctuate around $2600 per ounce. Looking at the historical performance of gold prices during rate cuts, gold often shows an upward trend. In terms of the current rate cut situation, this 50 basis point rate cut exceeded market expectations, and the Fed's statement shows increased confidence in inflation, moving steadily towards 2%, with the Fed lowering the 2024 US GDP growth forecast to 2.0%; lowering the 2024 core PCE inflation forecast to 2.6%; raising the 2024 US unemployment rate forecast to 4.4%. Looking ahead to future rate cut expectations, Fed policymakers project a federal funds rate of 4.4% by the end of 2024, down from the June forecast of 5.1%; a rate of 3.4% by the end of 2025, down from the June forecast of 4.1%; and rates of 2.9% by the end of 2026 and 2027, down from the June forecasts of 3.1% and 2.8% respectively. The Fed's rate cut marks the beginning of a shift in US monetary policy. With the Fed's rate cut in effect, the gold price may converge towards $2600. However, from a market perspective, the London gold price quickly fell back after reaching $2600, closing at around $2560 per ounce on the 19th, with significant selling pressure resulting from the larger-than-expected rate cut. As of September 10, 2024, COMEX gold net long positions were around 24231 contracts, close to levels before the Fed's rate cut in 2022. With the rate cut in effect, if there are no new catalysts, it is predicted that the short-term gold price will fluctuate around $2600 per ounce. Looking at the historical performance of gold prices during rate cuts, gold prices often show an upward trend. According to institutional calculations, understanding gold price variations on a monthly basis and real interest rate changes, from February 2000 to June 2024: 1) the average modified duration of gold bullion is 56, with an average convexity of 88033; 2) the results of the second regression show y=0+(-11.4251)*x^1+(14.3731)*x^2. These parameters provide a certain reference for the degree of gold price changes with future rate cuts, opening up new upward potential for gold during the rate cut process. In early July, gold prices continued to rise significantly, hitting $2484 per ounce on the 17th, reaching a new historical high. Subsequently, due to profit-taking by investors and increased market volatility, gold prices fell slightly, but still maintained most of the recent gains until hitting a new historical high after the September rate cut. The resilience of gold prices largely reflects the attractiveness of gold as a safe-haven asset in an environment of high economic and geopolitical uncertainty. Professional investors are increasingly bullish on gold, and a significant number of investors are waiting for better prices to enter the gold market. Therefore, it is not surprising that there is a significant influx of buying during recent price declines, significantly raising the bottom price of gold. The trading conditions of major gold investment products reflect strong bullish sentiment. In mid-July, CME (Chicago Mercantile Exchange) gold futures net long positions reached a four-year high, and although there was some profit-taking in the later part of the month, it only saw a minor decline. Similarly, funds flowed into gold ETPs (exchange-traded products) for the third consecutive month in July, with total holdings reaching a five-month high in the latter part of the month. The increasing interest of investors in gold helps offset the impact of the slowing gold purchases by global official institutions. It is worth emphasizing that although the pace of buying has slowed, the total amount of gold bought by official entities is still robust when measured against historical standards. With escalating geopolitical tensions and increasing concerns about sovereign debt issues in the US and Europe, official institutions have ample reason to diversify their international reserves. Looking ahead, given the numerous macroeconomic and geopolitical uncertainties that will continue to favor gold investment, MetalsFocus remains positive about the outlook for gold. In the short term, considering the increasing concerns about economic recession, continued unwinding of carry trades, the US stock market still being at high levels, and other factors, there is still room for further selling pressure. Volatility remains high, and the ongoing deleveraging could limit the upward potential of gold prices. Once the rate-cut cycle begins in September, both bond yields and the US dollar exchange rate may see larger declines. This is expected to further drive funds into the gold market, with the gold price potentially reaching new highs between the fourth quarter of 2024 and the second quarter of 2025. Relevant stock concepts: Zijin Mining Group (02899): The company's main source of profit comes from copper mining and gold mining businesses. In the first half of the year, the company produced 518,570 tons of copper, a year-on-year increase of 5.3%, and 35,406 kilograms of gold, a year-on-year increase of 9.5%. During the period, the company's Kamoa Copper Mine Phase III Concentrator was completed and put into operation six months ahead of schedule, with annual copper production expected to exceed 600,000 tons, becoming the largest in Africa and the third largest in the world; the Savarynton Gold Mine 2.4 million tons per year mining and 5 tons per year gold smelting project was completed and put into operation as scheduled. The company's main mineral projects are progressing in an orderly manner, and with the expectation of high gold and copper prices being maintained, the company's performance growth is guaranteed. Shandong Gold Mining (01787): According to Morgan Stanley's report, in the context of soaring gold prices, Shandong Gold Mining continues to enjoy strong profits.Trends, the company's production growth originates first from the further resumption of work at the Linglong Mine, second from the start-up of the Guyankadanio (Cardinal) project in the last quarter; and third from the contribution brought by the subsidiary Yin Tai Gold (000975.SZ) holding 28.89% (now known as Shanjin International Gold).LAOPU GOLD (06181): In the first half of 2024, LAOPU GOLD's revenue and net profit increased by 148% and 199% year-on-year respectively. Despite the high volatility of gold prices and decline in the gold jewelry industry since Q2, its growth performance has been particularly impressive. The main reason is that, with the strong product strength of the company, coupled with the popularity on social content platforms such as Xiaohongshu, the company's brand successfully broke through, leading to a rapid increase in the number of consumers.