Haitong Securities: The price of gold may be at a new starting stage with many future catalytic factors.

Guotai Junan Securities released a research report stating that with the rise of Trump to power, gold may have entered a new cycle. In terms of time, Trump took office on January 20, 2025, cutting off the time cycle of gold prices with the previous two presidents; in terms of position, January 20 coincides with the intrinsic value point of $2700 per ounce that was calculated, thus it is speculated that gold may currently be in the early stages of a new cycle. As of the end of March, the 10-year US Treasury bond yield has not changed much, and there is still hope for the risk premium portion of interest rates to further decrease after tariff and other policies are implemented, leading to a decrease in nominal rates and a rise in gold prices. Key points of Guotai Junan Securities are as follows: International gold prices have performed well and are currently above $3100 per ounce Since 2025, global gold prices have shown significant increases, with domestic gold prices reaching around 730.80 yuan per gram as of March 31, 2025, an increase of 17.5% from the beginning of the year and 40.9% from the same period last year; London gold prices are around $3,115.10 per ounce, an increase of 17.7% from the beginning of the year and 40.7% from the same period last year. The long March is just beginning, and gold may have just entered a new cycle There are three dominant factors that influence gold prices: total output, currency, and interest rates. In 2024, Guotai Junan Securities estimated the intrinsic value of gold to be around $2700, and following the shift in monetary policy by the Federal Reserve in September, the gold price began to converge rapidly towards its intrinsic value. Subsequently, with Trump taking office, gold may have entered a new cycle. In terms of time, Trump took office on January 20, 2025, cutting off the time cycle of gold prices with the previous two presidents; in terms of position, January 20 coincides with the intrinsic value point of $2700 per ounce that was calculated, leading to the inference that gold may currently be in the early stages of a new cycle. The relationship with interest rates is gradually returning, and gold may be driven by multiple factors in the future Guotai Junan Securities believes that there have been some changes in the logic of gold prices in 2025 compared to 2024. Gold and interest rates were somewhat decoupled in the past few years, with gold prices not being greatly affected despite continuous rate hikes by the Federal Reserve from 2022 to 2024. This may be due to the rapid expansion of the US dollar scale during the pandemic, leading to a bias towards pricing gold in terms of the US dollar scale. Currently, with gold stabilizing above $2700 per ounce on January 20, the relationship between gold and the US dollar has balanced out, and the US dollar scale is not expected to further stimulate gold prices in the short term, indicating that the role of interest rates in gold pricing may strengthen. From the perspective of interest rates, as of March 31, 2025, the real yield of the 10-year US Treasury was about 1.85%, a decrease of 35 basis points from 2.20% on January 20. Using the duration estimated by the framework report, the current increase in gold's intrinsic value should be about 17%, meaning that the fair price of gold should be around $3155 per ounce, which is relatively consistent with the current trend of gold prices breaking through $3100 per ounce. Furthermore, the calculations did not take into account the incremental factors of the US dollar scale, so if factors such as the US dollar scale continue to increase, there may be more driving factors for gold prices in the future. There may still be downward space for interest rates, and they may continue to drive gold prices higher Based on the DKW model analysis of US Treasury yields, as of the end of February 2025, the risk premium portion of the 10-year US Treasury yield was about 0.38%. This portion has already seen a decrease once Trump took office and his policy direction became clearer, but it is still at a relatively high level compared to before Trump's victory in the presidential election last year. As of the end of March, there has not been much change in the 10-year US Treasury yield, and there is still hope that the risk premium portion of interest rates will further decrease after tariff and other policies are implemented, leading to a decrease in nominal rates and a rise in gold prices. The US dollar scale is expected to continue to expand, which may also drive gold prices higher According to the Penn budget model estimate, the comprehensive expenditure and tax proposals put forward by the Trump administration will increase the US basic deficit by $5.1 trillion over the next 10 years before considering the impact of economic growth, and by $4.9 trillion after considering the impact of growth. This is also expected to have a certain impact on gold prices. Target sector: Shandong Gold Mining (600547.SH), Zijin Mining Group (601899.SH), Zhongjin Gold Corp., Ltd (600489.SH), Shanjin International Gold (000975.SZ), Hunan Gold Corporation (002155.SZ), Chifeng Jilong Gold Mining (600988.SH), Shengda Resources (000603.SZ), Shandong Humon Smelting (002237.SZ), etc. Risk Warning: Unexpected changes in the Federal Reserve's monetary policy, lower than expected demand for precious metals, and increased geopolitical risks worldwide.