Gold prices continue to decline, domestic gold jewelry prices fall significantly, institutions: bullish on gold stock upside potential

Today’s domestic gold jewelry prices show continued decline, with a clear pullback, some dropping below 1500 yuan/gram. Chow Sang Sang’s pure gold price experienced the largest decrease, down 55 yuan/gram from yesterday. Chow Tai Fook, Luk Fook Jewelry, Chow Tai Seng, and other brands also saw prices fall by 48 yuan/gram.

It is noteworthy that since the US-Iran conflict (March 2-18), gold prices have been steadily declining. As of the latest report, Gold ETF Huaxia (518850) has experienced a maximum drawdown of 7.35%, and Gold Stock ETF (159562) has a maximum drawdown of 18.98%.

CITIC Securities pointed out that after previous Middle East conflicts, the medium-term trend of gold prices still depends on the US dollar’s credit and liquidity factors. Looking ahead to this round of conflict, it is expected that the continuation of loose liquidity and weakening US dollar credit will continue to push up gold prices. Historically, valuation or stock price percentile advantages have strengthened the upside potential of the gold sector. Currently, the PE valuation levels of leading companies have fallen to a historic low of 15–20x. Considering that recent stock and gold price peaks have been highly synchronized, there is optimism about new highs in gold prices driving new highs in stock prices.

Gold ETF Huaxia (518850) and Gold Stock ETF (159562) track the CSI Shanghai-Shenzhen-Hong Kong Gold Industry Stock Index, which selects 50 large-cap listed companies involved in gold mining, smelting, and sales from the mainland and Hong Kong markets to reflect the overall performance of gold industry listed companies in these markets.

It is also noteworthy that the management fee plus custody fee for Gold ETF Huaxia (518850) and Gold Stock ETF (159562), totaling 0.2%, are among the lowest in similar products.