CITIC Construction Investment: The Fed's rate cut cycle is expected to continue, which will inject new momentum into the rise of gold prices.

Golden Finance reports that CITIC Construction Investment Securities has published a research report stating that the explanatory power of marginal demand on gold pricing has increased. Returning to the traditional supply and demand logic, due to the relatively stable supply of gold, with annual production maintaining around 3,600 tons, the real pricing variable for gold lies in demand, especially marginal demand. Gold demand mainly includes 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 the demand from European and American ETFs (private sector investment demand in Europe and America, mainly from overseas institutional investors), and its demand or investment framework mainly depends on the real interest rate of U.S. Treasury bonds. The private sector investment demand in Europe and America (such as ETF demand) still shows a strong correlation with the real interest rate of U.S. Treasury bonds. With the decline in U.S. inflation and the decrease in labor market resilience, expectations for interest rate cuts by the Fed have risen in the second half of the year. The decline in nominal and real interest rates brought about by the onset of rate cuts will inject new momentum into the rise of gold. (Jin10)