CITIC Securities: The Fed's rate-cutting cycle is expected to continue, injecting new momentum into gold price increases

Jinse Finance reported that China Securities Construction Investment Corporation released a research report stating that marginal demand has become a stronger explanatory factor for gold pricing. Returning to the traditional supply and demand logic, since gold supply is relatively stable, with annual production basically maintained at around 3,600 tons, the real pricing variable for gold lies in demand, especially marginal demand. Gold demand mainly consists of three parts: private sector consumption demand, private sector investment demand, and official gold purchase demand. In the past, the marginal demand for gold was mainly contributed by European and American ETF demand (private sector investment demand in Europe and the US, mainly from overseas institutional investors), and their demand or investment framework mainly depends on the real yield of US Treasury bonds. Private sector investment demand (such as ETF demand) in Europe and the US still shows a strong correlation with the real yield of US Treasury bonds. As US inflation falls and the resilience of the labor market declines, expectations for a Federal Reserve rate cut in the second half of the year are heating up. The start of rate cuts, which will drive down both nominal and real interest rates, will inject new momentum into gold's rise. (Golden Ten Data)