Gold ETF Starts the Year with Over 1% Gain for All
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Over the past year, the gold market has experienced unprecedented highs, igniting a significant "gold rush" among investorsAs we look towards the end of 2024, the market exhibits signs of volatilityHowever, as 2025 begins, there are indications of recovery within the gold sector, with several gold stocks showing surprising resilience against prevailing trends, and related financial products achieving notable resultsAccording to Wind statistics, as of January 7, gold-related ETFs have collectively risen by more than 1% since the start of the year, with some soaring as high as 5.55%. The average increase over the past year has surpassed 20%.
The rise in performance, coupled with growing market demand, has led to a significant uptick in the trading volume of gold ETFs
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However, after an extended period of growth, some investors are beginning to withdraw funds from this booming sectorThis raises a pivotal question for the upcoming year: can gold recreate its previous fervor? “Recently, investors’ risk appetite has diminished, driving a shift towards defensive sectorsMany are looking to secure profits from previously high-performing segments, redirecting their capital towards sectors that are perceived as offering better value with solid fundamentals, with gold stocks being a prime example,” explained Liu Tingyu, manager of the Yongying Gold Stocks ETF
In Liu's perspective, the growth potential for gold stocks in 2025 remains significantThe current valuations of gold stocks present substantial upside, as leading mining companies continue to improve production rates, suggesting promising performance for gold industry firms and positioning gold stocks to amplify the impact of rising gold prices. Yao Xi, a manager of the GF Shanghai Gold ETF, echoed these sentiments, noting that the overall market sentiment is relatively weak at present, with low volatility and gold remaining in a fluctuating configuration zone
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Over a prolonged period, the central bank’s gold purchases are likely to continue supporting the central price of gold, especially coupled with the anticipated adjustments from the Federal Reserve’s interest rate cuts, which could help gold regain an upward trajectory.
Remarkable Performance of the Gold Sector
At the beginning of the year, the gold sector has shown an upward trend amid market fluctuationsWind data revealed that on January 7, COMEX gold prices hovered around $2650 per ounceAdvertisements
Although this reflects a decrease from historical peaks, it remains in a relatively elevated zone, boasting an approximately 30% increase over the past year
Similarly, Shanghai gold prices recorded an impressive accumulated rise of 29.8% over the past year, peaking at 636.83 yuan per gram, setting a new historical highNotably, the gold index (882415), which tracks the performance of domestic gold-listed companies, also displayed remarkable gains, achieving a 23.77% increase during the same timeframeIn the context of the Shanghai Composite Index's decline of 3.64% to start the year, numerous gold stocks have demonstrated resilience, with Shanjin International climbing 8.78% and both Shandong Gold and Sichuan Gold rising more than 6.4%. Excluding *ST Zhongrun, the remaining 11 gold index constituent stocks averaged an impressive return of 5% within the year. Consequently, related thematic funds have yielded commendable returns
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Currently, there are 20 gold ETFs available in the market, including those tracking SSH gold stocks as well as commodity products linked to SGE gold and Shanghai goldBy January 7, all of these products reported increases, with an average gain of 2.21% for the year.
Besides this product, the remaining five are new products gradually introduced throughout 2024. Among commodity ETFs, the best performer so far is the Tianhong Shanghai Gold ETF, which has risen 1.33% since the beginning of the year
Analyzing the long-term perspective, the performance of the 14 commodity-based ETFs has been particularly notable, with an average increase of 28.68% over the past yearThe highest performer, Guotai Gold ETF, has demonstrated a remarkable return of 28.88% in the previous year.
In the wake of these impressive returns, trading volumes of gold ETFs have also notably increasedAmong the aforementioned 20 gold-themed ETFs, 16 products have enjoyed an increase in their average daily trading volumes since the beginning of the year, with 40% of these experiencing a doubling in trading volumesFor instance, the Yongying CSI Shanghai-Hong Kong Gold Industry Stocks ETF, with a total asset size of 1.559 billion yuan, noted an average daily trading volume of 179 million yuan, a surge of 1.6 times from the previous month’s average of 68.55 million yuan. Furthermore, the Ping An CSI Shanghai-Hong Kong Gold Industry Stocks ETF, even with a modest asset size of 28 million yuan, has shown remarkable performance, with its average daily trading volume increasing by 5.7 times this year
On January 3, this product recorded a total transaction volume of 16.93 million yuan, exceeding 20 times the volume on December 31, 2024. On that day, the IOPV (Indicative Optimized Price Value) of this product reached a premium of 1.49%.
Opportunities May Outweigh Risks
In 2024, driven by the Federal Reserve's subsequent interest rate adjustments, gold prices entered a high-level consolidation phase towards the end of the year, and gold stocks experienced some correction influenced by market trendsIn response, Liu Tingyu noted, “Currently, gold stocks have dropped to the lower end of their valuation history relative to the price-earnings ratio, indicating an overly pessimistic expectation regarding gold pricesAs domestic gold prices rebound, gold stocks are beginning to witness notable valuation recoveries, exhibiting higher elasticity amid the upward movement of gold prices.”
Liu further detailed that post the December 2024 Federal Reserve meeting, the market's expectations for rate cuts may have been overly pessimistic, suggesting that subsequent stabilization of the U.Seconomy might not progress smoothly, with potential cuts exceeding market forecastsGlobal central banks’ gold purchasing trends represent a long-term trajectory, with the People's Bank of China resuming its gold purchases after a six-month hiatus, while other emerging market countries are also increasing their gold-buying activities, thereby establishing substantial support for gold prices in the long run. “However, the resilience of U.S
economic data has led to a pullback in gold prices recently, indicating a lack of immediate momentum for upward growth in the short term, leaving gold in a consolidation phase,” Wang Xiang notedHe pointed out that improved U.Seconomic data has been pushing the U.Sdollar index higher, placing additional pressure on gold prices
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