Shenwan Hongyuan Group: "Hidden concerns" after record high gold prices?

Shenwan Hongyuan Group Securities released a research report stating that since August, the price of gold has continued to rise and has hit a new all-time high. However, this round of gold price increase may be primarily driven by European and American investors, as Asian investors have not shown a "relay" trend. The key factors that may determine whether gold can continue to break through are the space for further interest rate cuts by the Federal Reserve and the future performance of the Chinese stock market. The main points of Shenwan Hongyuan Group Securities are as follows: (1) What are the main reasons for the recent high in gold? The heating up of interest rate cut expectations by the Federal Reserve, combined with the narrative catalyzed by the Fed's "independence" Since late August, gold has risen sharply, mainly due to the decline in real interest rates in the background of escalating expectations for interest rate cuts. Since late August, the price of gold has continued to rise from $3315.7 per ounce on August 20th to $3643.1 per ounce on September 12th, repeatedly hitting new highs. The main driving factor behind this is the decline in real interest rates caused by the heating up of interest rate cut expectations. The low inflation pressure in the United States, weak employment data, and Trump's intervention in the Federal Reserve's "independence" have been the main reasons for the heating up of interest rate cut expectations in the market. 1) Inflation sub-items related to tariffs in August still showed weakness. 2) Non-farm payroll only increased by 22,000 people in August, significantly lower than expected. 3) Trump's intervention in the "independence" of the Federal Reserve further catalyzed the fermentation of interest rate cut expectations. (2) Why is gold in the Asian market "stagnating"? The A-share bull market has attracted configuration-type funds, and the rapid appreciation of the renminbi has also had an impact The recent rise in gold prices has mainly come from European and American investors, with little increase in gold prices in the Asian market. 1) Breaking down by trading session, the cumulative growth rate of gold prices during the US trading session since August 20th is 7.7%, which is the main drive for the rise in gold prices. 2) Looking at gold ETF flows, since August, American and European investors have increased their holdings by 37.1 tons and 20.8 tons respectively, while Asian investors have reduced their holdings by 4.8 tons. The seesaw effect caused by the A-share bull market may be the main reason for the "stagnation" of the Asian market. Historically, the demand for European and American investments is easily influenced by real interest rates, while the gold allocation of Chinese investors is easily influenced by equity market performance. The strong performance of the A-share market recently, combined with the rapid appreciation of the renminbi, may to some extent suppress the demand for gold from domestic investors.