Top View | Minsheng Securities Qiu Zuxue: Gold prices are expected to break through $3000 in the Year of the Snake
Looking ahead to 2025, Qiu Zuxue stated that there are still many internal and external variables affecting the metals industry. Externally, the uncertainty of the overseas environment and the pace of the Federal Reserve's interest rate cuts are worth noting. "Although the direction of future Fed rate cuts is quite certain, there will always be some fluctuations between reality and expectations regarding the path, magnitude, and pace of rate cuts." "Internally, as the policy tone continues to warm, the continued efforts of policies represented by domestic demand within 2025 are highly certain. At the same time, whether it's fiscal or monetary policy, a friendly 'dual easing' is the general trend." said Qiu Zuxue. Overall, Qiu Zuxue is optimistic about the "spring rally" of the metal sector in the Year of the Snake and recommends that investors pay close attention. "On the one hand, from the calendar effect perspective, the performance of the metal sector in spring is stronger than in other seasons. At the beginning of the year, whether it's credit or economic expectations, the environment is relatively friendly. On the other hand, with continued policy efforts, investors are relatively optimistic about the economic outlook for the whole year, and this will also be coupled with the demand for replenishing inventories in the industrial chain at the beginning of the year." Qiu Zuxue pointed out. Gold prices are expected to break through $3,000 per ounce Regarding gold, which reached record highs in 2024, Qiu Zuxue stated that the core driving factors are twofold: real interest rates and safe haven demand. "Last year's record highs in gold prices were closely related to the market's expectation that the Federal Reserve's monetary policy would turn a corner. In the first half of last year, US nominal interest rates remained relatively high. With the decline in inflation, the Fed's entry into a rate-cutting cycle was quite clear. However, before the rate cuts actually landed, market expectations fluctuated repeatedly." In the second half of 2024, as the Fed officially entered the rate-cutting cycle, nominal interest rates fell. Since expectations for US inflation have begun to fall, the actual US real interest rate is actually going down. Conventionally, when real interest rates fall, it means that the investment value of gold increases significantly. "At the same time, under the demand for safe haven assets, the pace of gold purchases by central banks around the world is still quite rapid. Coupled with the decline in US real interest rates, the combination of these two factors has pushed gold prices to historic highs." Qiu Zuxue emphasized that although gold prices, the US dollar, and US real interest rates showed significant divergence in 2024, the main reason was that under the relatively chaotic and complex external environment, investors had a strong demand for safe haven assets, leading to a significant shift in the weight of factors affecting gold prices. "Overall, I believe that the analytical framework for gold, which is centered on real interest rates, remains fundamentally unchanged." Looking ahead to the Year of the Snake, Qiu Zuxue stated that he remains optimistic about the performance of gold prices in 2025. On the one hand, the Fed has officially entered the rate-cutting cycle, and global monetary easing in 2025 is directional. "On the other hand, the external environment in the next few years will still be relatively chaotic, and the demand for safe haven assets will be strong. From the perspective of asset allocation, the allocation ratio of gold still has room for increase." Gold prices are expected to continue their strong upward trend in 2025. "From an optimistic perspective, gold prices are very likely to break through $3,000 per ounce this year."
Time:
2025-02-04 16:23
What will be the overall performance of the non-ferrous metals sector in 2025, and what new evolutionary trends will the industry see? Specifically, with gold prices skyrocketing, can they reach new highs in the Year of the Snake?
On February 3, Qiu Zuxue, vice president of Minsheng Securities Research Institute and chief analyst of metals and materials, appeared on the "Light Boat Must Pass Ten Thousand Mountains"—Chief Connection—2025 New Year Market Outlook program on The Paper, offering analysis and prospects.
Optimistic about the spring market for the metals sector
“In 2024, the non-ferrous metals sector was quite exciting. On the one hand, the prices of several metal varieties hit record highs. On the other hand, the strong commodity prices also led to the emergence of investment opportunities in the secondary market,” Qiu Zuxue pointed out.
Looking ahead to 2025, Qiu Zuxue said that there are still many internal and external variables in the metals industry. Externally, the uncertainties in the overseas environment and the pace of interest rate cuts by the Federal Reserve are worth noting. “Although the direction of future Fed rate cuts is quite certain, there will always be some fluctuations between reality and expectations regarding the path, magnitude, and pace of rate cuts.”
“Internally, as the policy tone continues to warm, domestic demand, represented by policies within 2025, will continue to exert force, and this certainty is very high. At the same time, macro-wise, whether it's fiscal or monetary policy, a friendly ‘dual easing’ is the general trend,” Qiu Zuxue said.
Overall, Qiu Zuxue is quite optimistic about the "spring market" for the metals sector in the Year of the Snake and recommends that investors pay close attention.
“On the one hand, from a calendar effect perspective, the performance of the metals sector in the spring is stronger than in other seasons. At the beginning of the year, whether it's credit or economic expectations, the environment is quite friendly. On the other hand, with continued policy efforts, investors are relatively optimistic about the economic trend for the whole year, and this will also be coupled with the replenishment needs of the industrial chain at the beginning of the year,” Qiu Zuxue pointed out.
Gold Gold Price Prices are expected to break through $3,000 per ounce
Regarding gold, which saw repeated price increases in 2024, Qiu Zuxue said that the core driving factors are twofold: real interest rates and safe haven demand.
“Last year's repeated record highs in gold prices were closely related to the market's expectation that the Federal Reserve's monetary policy would turn a corner. In the first half of last year, US nominal interest rates remained relatively high. With the decline in inflation, the Fed's entry into a rate-cutting cycle was quite clear. However, before the rate cuts actually landed, market expectations fluctuated repeatedly,” Qiu Zuxue pointed out.
Qiu Zuxue further pointed out that in the second half of 2024, as the Federal Reserve officially entered the rate-cutting cycle, nominal interest rates fell accordingly. Since expectations for US inflation have begun to decline, the actual US real interest rate is actually going down. Conventionally, when real interest rates go down, it means that the allocation value of gold is significantly improved and goes up.
“At the same time, under the demand for safe haven assets, the pace of gold purchases by central banks around the world is still quite strong. Coupled with the decline in US real interest rates, the combination of these two factors has pushed gold prices to historic highs,” Qiu Zuxue said.
Qiu Zuxue emphasized that although gold prices, the US dollar, and US real interest rates showed significant divergence in 2024, the main reason was that the external environment was relatively chaotic and complex, leading to strong investor demand for safe haven assets, resulting in a significant shift in the weighting of factors affecting gold prices.
“Overall, I believe that the analytical framework for gold, which is centered on real interest rates, has not fundamentally changed,” Qiu Zuxue said.
Looking ahead to the Year of the Snake's gold price, Qiu Zuxue said that he remains optimistic about the performance of gold prices in 2025. On the one hand, the Federal Reserve has officially entered the rate-cutting cycle, and global monetary easing in 2025 is directional.
“On the other hand, the external environment in the next few years will still be relatively chaotic, and the demand for safe haven assets will be strong. From the perspective of asset allocation, there is still room for an increase in the allocation ratio of gold,” Qiu Zuxue pointed out.
Therefore, Qiu Zuxue believes that gold prices are expected to continue their strong upward trend in 2025. “From an optimistic perspective, gold prices are very likely to break through $3,000 per ounce this year.”
Emerging industries are expected to reshape material-side demand
In terms of allocation, Qiu Zuxue suggests that investors focus on three areas: First, in terms of industrial metals, he is optimistic about electrolytic aluminum and copper. Second, he remains optimistic about gold prices.
“Third, in terms of energy metals, the price of lithium carbonate has seen a clear bottoming signal, and investment opportunities can be further explored in 2025,” Qiu Zuxue said.
In addition, Qiu Zuxue pointed out that in terms of emerging industries, the development of AI and humanoid robots will be disruptive in the future, and their leadership in the material sector will also reshape new industries.
“Among them, the AI field is gradually extending from upstream computing power to the application side, and the application side will further increase the demand for upstream computing power, bringing new changes to the material side, including new demands such as copper interconnects, server liquid cooling, tantalum capacitors, and supercapacitors,” Qiu Zuxue said.
Qiu Zuxue said that in 2025, humanoid robots will enter their commercialization year, a new industry that may surpass the automotive industry, and its driven industrial chain may be even larger. “Currently, humanoid robots are bringing new application scenarios for lightweight materials, magnetic materials, and precision parts. The change in the supply and demand structure brought about by this incremental demand is far higher than the replacement demand brought about by electric vehicles.”
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