Guosheng Securities: How to view gold hitting new highs again?

Guosheng Securities released a research report stating that in the medium to long term, gold is likely to continue its upward trend, but it is unlikely to replicate the continuous sharp rise in 2024 in 2025. It is more likely to experience a fluctuating and repetitive upward trend, and it is recommended to wait for a pullback for investment opportunities and not chase after high prices in the short term. Event: On February 7 at 21:30 Beijing time, the US released the January 2025 non-farm employment data. Since the beginning of 2025, the price of gold has been continuously rising and has reached a new historical high. Guosheng Securities' main points are as follows: The US January employment data is mixed, showing resilience, and the expectations of a rate cut by the Federal Reserve have been significantly lowered. The recent surge in gold prices is due to three main factors. While the medium to long-term outlook is positive, it is unlikely to replicate the sharp rise seen in 2024 this year, and a fluctuating and repetitive upward trend is more likely. In the short term, it is recommended to wait for a pullback for investment opportunities. In January, the US added 143,000 non-farm jobs, lower than the expected 170,000, but the previous two months were revised upwards by 100,000. The unemployment rate was 4.0%, lower than the expected 4.1%, the lowest since May 2024. After updating the calculation method, the average monthly job growth in 2024 was revised down from 186,000 to 166,000. The significant drop in new employment this month is partly due to severe weather conditions and California wildfires, as well as the impact of the statistical methodology adjustment. Overall, the drop in the unemployment rate and the increase in wage growth indicate that the US labor market remains strong and inflation pressures are still severe. After the non-farm data was released, US stocks fell, bond yields rose, and the expectations for a rate cut by the Federal Reserve were significantly lowered. The implied rate cut frequency in 2025 decreased from 1.8 times to 1.4 times, shifting market expectations from a high probability of two rate cuts to one. The earliest possible rate cut timing remains unchanged in June. Since the beginning of the year, gold has been steadily rising and reaching new historical highs due to three main factors: (1) the decline in the US dollar index and bond yields, (2) heightened risk aversion sentiment caused by Trump policies, and (3) a significant flow of gold back to the US leading to a sharp tightening in gold liquidity. Outlook for the future trend of gold: In the medium to long term, gold is likely to continue its upward trend, but it is unlikely to replicate the continuous sharp rise seen in 2024 in 2025. It is more likely to experience a fluctuating and repetitive upward trend, and it is recommended to wait for a pullback for investment opportunities and not chase after high prices in the short term. Risk warning: US economic conditions and inflation, Federal Reserve monetary policy, geopolitical conflicts, etc., continue to exceed expectations.