Important Disclaimer: All market information and institutional views below are for reference only and do not constitute any investment advice. Precious metal prices are highly volatile, and futures and spot trading carry extremely high risks. Please carefully assess your own risk tolerance.

I. Real-time Market Performance (Beijing Time, Morning Session)

International Market

London Spot Gold (XAUUSD): $4174.73 per troy ounce, up $29.75 intraday, or 0.72%. During the morning session, the price fluctuated upward from around $4140, hitting an intraday high of $4182 and a low of $4139. Buying orders entering the market during the Asian-European session drove the rebound.

COMEX New York Gold December Main Futures Contract: $4200.2 per troy ounce, up $43.2, or 1.04%. It closed at $4157 in the overnight US session, and the corrective rally continued during Asian trading hours today.

Market characteristics: After gold prices pulled back yesterday, the US Dollar Index edged lower and the 10-year US Treasury yield dipped slightly in this morning’s session. The opportunity cost of holding gold, a non-interest-bearing asset, declined, fueling the rebound in gold prices. However, futures speculative long positions and ETF capital flows showed clear divergence. Global gold ETFs sustained large-scale inflows, while managed fund net long positions on COMEX fell by approximately 84 tonnes in September. The opposing directional bets between long-term institutional allocation capital and short-term speculative capital represent a major feature of the current market.

Domestic Market

Gold T+D (Shanghai Gold Exchange): CNY 901.08 per gram, up CNY 9.09, +1.02% Shanghai Gold Futures Main Contract: CNY 903.5 per gram, up CNY 8.74, +0.98% SGE Gold 9999 Spot: CNY 900.6 per gram, +0.99%

Retail Prices of Physical Gold (Brand Pure Gold Retail Quotes)

Chow Tai Fook: CNY 1255/g; Lao Feng Xiang: CNY 1250/g; Chow Sang Sang: CNY 1254/g; Chow Tai Seng: CNY 1249/g; King Fook Jewellery: CNY 1253/g Investment gold bars offered by banks: ranging from CNY 917.86 to CNY 927 per gram.

Price spread explanation: Jewellery gold includes brand premiums and processing fees, creating a large gap versus raw gold prices. Following the recent correction in international gold prices, retail gold prices at domestic wholesale hubs such as Shuibei have fallen roughly CNY 150 per gram from prior highs. A buying boom has emerged in the physical retail segment, with private consumption demand recovering. Nevertheless, amid elevated gold prices, total gold jewellery consumption remains weak year-on-year, and consumers tend to prefer small-volume, lightweight products.

A-share Gold Sector Performance

The broader market weakened in the morning session, while the gold sector bucked the trend and strengthened. Shanjin International led the gainers, rising +4.56%. Chifeng Gold climbed +3.35%, and China National Gold Group gained +2.75%. Shandong Gold, Zhaojin Mining and Zijin Mining advanced in tandem. Domestic gold ETFs kept attracting capital inflows; ChinaAMC Gold ETF (518850) recorded inflows for three consecutive trading days, absorbing a total of CNY 616 million. Capital inflows were mainly driven by positive central bank gold purchase data.

II. In-depth Interpretation of Core Fundamental News

1. People’s Bank of China: Gold reserves increased for 23 consecutive months; September monthly purchases hit the peak of this cycle The State Administration of Foreign Exchange released September reserve data on October 7. At end-September, China’s gold reserves stood at 77.47 million troy ounces (around 2,409.59 tonnes), rising by 740,000 troy ounces (roughly 23.02 tonnes) from end-August. Gold reserves have expanded for 23 straight months starting November 2024. Monthly gold purchase volumes have widened for seven consecutive months, and September purchases marked the highest level since the resumption of this round of gold buying.

Underlying logic This represents long-term strategic reserve allocation, aiming to diversify foreign exchange reserves, reduce risks stemming from swings in US dollar assets, and hedge against geopolitical and global debt risks. Currently, gold accounts for about 8.5% of China’s foreign exchange reserves, below the global central bank average of 27%. Institutions generally believe there remains room for further medium-to-long-term accumulation.

Key timing note: International gold prices posted a notable decline in September (London gold fell 6.52% for the full month). The central bank chose to ramp up purchases during the gold price correction, reflecting a buy-on-dip allocation strategy rather than short-term trading activity.

2. World Gold Council: Global gold ETF inflows hit all-time high in Q3 The World Gold Council published its report on October 7: Global gold ETFs recorded inflows of approximately USD 10 billion in September; total Q3 inflows reached USD 31 billion, setting an all-time record. Total holdings of global gold ETFs rose by 67 tonnes to 4,256 tonnes, a historic high. Total assets under management (AUM) dropped 7% quarter-on-quarter to USD 574 billion due to asset shrinkage from lower gold prices. Even so, capital kept pouring in, showing firm entry by long-term allocation funds, with European and North American funds as the main sources of inflows.

Survey data from the World Gold Council: 89% of surveyed central banks expect global central bank gold reserves to keep rising over the next 12 months. 45% of surveyed central banks plan to increase gold holdings within one year, the highest proportion on record. 74% of central banks forecast the US dollar’s share in global reserves will keep declining over the next five years, and gold’s strategic status in sovereign reserves will continue to rise.

3. Multiple central banks ramp up gold purchases simultaneously; Russia sharply scales up gold procurement Russia’s Ministry of Finance announced on October 5 that between October 7 and November 6, purchases of foreign exchange and gold will be raised to five times the September level. A budget of 279.42 billion rubles has been allocated, with average daily purchases of roughly 12.7 billion rubles. Using excess oil and gas revenue, Russia continues to expand gold and foreign currency assets, further reinforcing the global trend of central bank gold buying. Central bank gold purchases have evolved from isolated actions by individual nations into a worldwide wave of reserve diversification, which serves as the core pillar supporting the medium-to-long-term floor for gold prices.
4. Federal Reserve Policy: Hawkish September FOMC meeting minutes; rate hike risks remain for the year, market prices in December hike On October 7, the Federal Reserve released the minutes of its September monetary policy meeting. In September, the Fed raised the federal funds rate by 25 basis points to 3.75%-4.00%, with unanimous approval for the rate increase. Key takeaways from the minutes: Most officials judged that one additional rate hike may still be necessary in 2026. Inflation persistence is higher than expected, and rebounding energy prices will lift upside inflation risks, delaying the timeline for inflation to fall to the 2% target. US economic and labour market resilience remains strong, arguing against rapid rate cuts. Monetary policy stays data-dependent, with no preset rate path. Fed Governor Waller delivered another hawkish public speech on October 8. To curb inflation, further rate hikes may be required. Expansion of AI infrastructure and energy shocks could prolong the inflation cooling cycle.

Market Pricing (CME FedWatch Tool) Probability of holding rates steady at the end-October policy meeting: 82%; probability of a rate hike: only 17%. Market odds for a 25bp rate hike in December have climbed to 81%.

Gold pricing logic: Gold bears no interest. Higher interest rates and elevated real US Treasury yields raise the opportunity cost of holding gold and weigh on gold prices. The key short-term contradiction is that central banks and long-term ETF funds keep buying gold, yet Fed high-rate expectations cap gold’s upside, creating sharp, volatile trading conditions.

5. Geopolitical Risks: Stalled Middle East tensions; geopolitical premium intermittently disturbs gold prices No material easing has occurred in the Middle East conflict, and shipping risks in the Strait of Hormuz persist. On one hand, the conflict lifts crude oil prices, amplifying global inflation pressure and in turn reinforcing Fed tightening expectations. On the other hand, sudden escalation of tensions will trigger rapid inflows of safe-haven capital into gold and drive short-lived price spikes. The current geopolitical premium remains in a state of “implicit underlying support” and has not been fully priced in. Surprising news can easily trigger intraday sharp rallies or plunges in gold prices, representing the biggest source of uncertainty for short-term trading.
6. Views from Industry Heavyweight: Bridgewater’s Dalio recommends a 5%-15% gold allocation in investment portfolios At the Greenwich Economic Forum on October 6, Ray Dalio, founder of Bridgewater Associates, made public remarks. He is shorting global debt amid rising risks from the global high-debt cycle, and recommends allocating 5%–15% of asset portfolios to gold to hedge against debt crises and currency depreciation risks. These comments further boosted institutional discussions over gold asset allocation and drove ETF capital inflows.

III. Summary of Bullish and Bearish Market Logic

✅ Bullish supporting logic (medium to long term)

• Sustained gold purchases by global central banks; the trend of reserve diversification is irreversible and underpins gold’s price floor.
• Rising global government debt; market concerns over long-term erosion of US dollar credit lift the value of gold as an asset free from sovereign credit risk.
• Large, persistent inflows into global gold ETFs; long-term institutional capital keeps building positions during gold price pullbacks.
• Unresolved long-running Middle East geopolitical conflict, capable of triggering safe-haven buying at any time.

⚠️ Bearish suppressing logic (short term)

• The Fed maintains high interest rates, with risks of an additional December hike this year. Elevated real US Treasury yields cap precious metal valuations.
• US inflation faces rebound risks; rising oil prices will strengthen inflation persistence, making a quick pivot to rate cuts unlikely for the Fed.
• Speculative long positions on COMEX gold futures keep falling; short-term capital sentiment is cautious, and rallies are vulnerable to profit-taking selling pressure.
• Should upcoming US CPI and PCE inflation data come in hotter than expected, US Treasury yields will surge, and gold prices will once again face downward pressure.

IV. Summary of Institutional Opinions

Guosheng Securities: The Fed is likely to pause rate hikes in October. Much of the negative impact of rate hikes has already been priced into the market. Gold prices are expected to enter a recovery phase, and central bank gold purchases will support higher valuation levels over the medium to long term. Zheshang International: In the long run, US fiscal risks, global reserve diversification and structural gold buying by central banks worldwide will continuously lift gold valuations. In the short term, investors must watch for pullback risks triggered by rebounding US Treasury yields. Tongguan Jinyuan Futures: Cautious outlook for the near term. High energy prices and sticky inflation reinforce Fed tightening expectations. US Treasury yields will struggle to fall from high levels, and gold prices are expected to see repeated choppy swings in the short run. Sprott Asset Management: Even amid high US Treasury yields, gold ETFs continue attracting massive inflows, signalling bullish conviction from long-term capital. Gold has a higher probability of breaking upward later.

V. Key Metrics to Monitor (Focus Points Going Forward)

• US CPI and core PCE inflation data (determines Fed policy direction, the primary driver for gold)
• US non-farm payrolls and unemployment rate, to gauge US economic resilience
• 10-year US real Treasury yield and US Dollar Index movements
• Weekly COMEX gold futures positioning and global gold ETF capital flows
• Breaking news on developments in the Middle East
• Monthly gold reserve updates from national central banks

VI. Brief Technical Reference

London Spot Gold: Short-term support at $4130–4140; strong support at $4080; initial resistance at $4220; strong resistance at $4280. Shanghai Gold Main Contract: Support at CNY 890–892/g; resistance at CNY 915/g.