Northeast: Under the background of a downward interest rate cycle, the price of gold has broken through 2600, and the price of copper continues to rebound.

Northeast released a research report stating that, against the backdrop of the current interest rate cut cycle and a slowdown in the U.S. economy, foreign funds have become more positive towards gold. The Federal Reserve's strategy belongs to "slightly lagging behind but closely following the curve," adjusting the pace of interest rate cuts to try to keep the economy within a narrower volatility range. Looking ahead, the economy will not always have low volatility sideways movement. Whether the rate cut is slow leading to economic slowdown, or fast leading to inflation rebound, at the current stage, both scenarios can be a logical basis for the upward trend of gold prices, and the medium-term trend of gold prices continues to be optimistic. In addition, interest rate cuts combined with fundamental factors are driving copper prices higher, and there is continued confidence in the value of copper mining stocks. Gold: The interest rate cut cycle has started, with overseas funds accelerating replenishing, pushing London gold above 2600. The closing price of London gold on Friday was $2621.74 per ounce, with a weekly increase of 1.7%. 1) Overseas active replenishment, driving gold prices higher: Central bank gold purchases and the influx of incremental Chinese funds have been key variables in the gold price increases in the first half of 2023 and 2024. However, the willingness of overseas investors to hold gold has been weakening, which is an important reason for the divergence between gold prices and real interest rates. Against the backdrop of the current interest rate cut cycle and a slowdown in the U.S. economy, overseas funds have become more positive towards gold: as of September 20, SPDR gold holdings were 875.4 tons, up by around 48 tons since early July, and as of September 17, COMEX non-commercial net long positions were 310,000 contracts, up by 69,000 contracts since early July, with both continuing to rise significantly this week. 2) How to view the Fed's subsequent interest rate cut pace? The September FOMC meeting cut interest rates by 50 basis points, marking the start of a new round of interest rate cuts with a larger magnitude. Powell explained the 50 basis point cut at the press conference as a promise to "not lag behind the curve," which can be understood as compensating for the missed opportunity to cut rates in July (due to a worsened unemployment rate in July that the Fed had not yet seen data on). Powell suggested that if data is good, the next one or two meetings may see a 25 basis point rate cut (consistent with the remaining 25-50 basis points guidance on the dot plot); if employment deteriorates, they may consider another 50 basis point cut; if inflation data reverses, they may pause rate cuts. Under this strategy, the Fed actually belongs to the category of "slightly lagging behind but closely following the curve," and through adjusting the pace of rate cuts, they aim to keep the economy within a narrower volatility range. However, in terms of direction, the economy will not always have low volatility sideways movement, and whether the rate cuts are slow leading to economic slowdown or fast leading to inflation rebound, these scenarios can serve as a logical basis for the upward trend of gold prices at the current stage. The constant catalyzing of gold buying (though it may bring about differences in the pace of gold prices) provides confidence and patience in the continued optimism for the medium-term trend of gold prices. In the long term, in a background of global fiat currency depreciation, geopolitical conflicts, and increased economic uncertainty, the value of gold allocation is highlighted. Key stocks: Zijin Mining Group (601899.SH), Shandong Gold Mining (600547.SH), Yintai Gold (000975.SZ), Chifeng Jilong Gold Mining (600988.SH), Hunan Gold Corporation (002155.SZ), Zhongjin Gold Corp., Ltd (600489.SH), Western Region Gold (601069.SH), ZHAOJIN MINING (01818), Shandong Humon Smelting (002237.SZ), Pengxin International Mining (600490.SH), etc. Copper: Interest rate cuts combined with fundamentals to drive copper prices higher, with continued confidence in the value of copper mining stocks. 1) 50 basis point rate cut catalyzing copper price increases: The Federal Reserve's 50 basis point rate cut strengthens the expectation of a soft landing, with non-commercial net long positions on COMEX copper increasing by 3.3 percentage points to 9.6%. This week, London copper rose 2.9% to $9486 per ton. 2) The fundamentals are supportive, destocking as expected, and copper prices are likely to continue to show a bias towards strength: warehouse inventories on the three major exchanges and domestic social inventories have both decreased by 94,000 tons and 84,000 tons respectively since early September, entering an destocking phase. On the supply side, the shortage of ore and the shrinkage of scrap copper; on the demand side, strong downstream buying interest, with SMM spot premiums continuing to rise to 90 yuan per ton, the pre-National Day stockpiling behavior is expected to accelerate the destocking of inventory. 3) With the central copper price trending upwards, there is continued confidence in the value of copper mining equity allocation: under the assumption of a soft landing, the central copper price is unlikely to significantly decline, and the bullish logic in the medium to long term remains unchanged. The central copper price is trending upwards, emphasizing the value of equity allocation. Key stocks: Zijin Mining Group (601899.SH), CMOC Group Limited (603993.SH), Western Mining (601168.SH), Jiangxi Copper (600362.SH), Jchx Mining Management (603979.SH), Tongling Nonferrous Metals Group (000630.SZ), MMG (01208), etc. Risk warning: U.S. inflation persistently exceeding expectations, global tightening of monetary policy exceeding expectations, U.S. dollar appreciation.