Year-to-Date Returns Exceed 30%! Gold ETFs Soar, Experts Warn: Gold Prices May Face Correction Risks

This week, the international gold price continued to rise to a new record, once exceeding $2,800 / ounce. Since the beginning of the year, gold has gained more than 32% and hit record highs more than 30 times. At the same time, gold-related themed funds have performed strongly, with a maximum return of 31%. By the end of the third quarter, the total size of gold-themed funds increased by more than 6% quarter-on-quarter, and some gold-themed funds even doubled their share in the third quarter.

Industry experts believe that uncertainties such as the US election and the geopolitical situation in the Middle East continue to have an impact on gold prices. In the long run, gold prices are expected to continue to move higher, but there is the possibility of a correction in the short term. Therefore, it is recommended that investors pay close attention to the trend of gold prices and reasonably grasp the investment rhythm.

According to the World Gold Council, since 2024, the price of gold has broken several historical records. At the same time, the yield of gold-themed funds has also increased significantly. According to Wind data, as of November 1, the average return of gold-related theme funds for the year reached 24%, and seven funds have returned more than 30% for the year. Among them, Huitianfu Gold and Precious Metals A fund since its establishment in August 2011, the annual return of up to 31.32%, ranking first. This was followed by the Huaxia China Securities Shanghai, Shenzhen and Hong Kong Gold Industry Stock ETF, as well as the gold ETFs of E-Fund, Cathay, Hua 'an, Boshi and Huaxia, which all had annual returns of more than 30%.

In addition, the Qianhai Open source Gold ETF, ICBC Gold ETF, EFund Gold theme A RMB, Harvest Gold (QDII-FOF-LOF), as well as Harvest, Cathay Pacific, Tianhong, Guangfa, Bank of China's Shanghai Gold ETF and other funds have also returned more than 29% this year.

With the increase in yields, gold has become one of the most eye-catching investment varieties this year, and the scale of related theme funds has also grown accordingly. According to Wind data, as of the end of the third quarter, the total scale of 43 gold-related theme funds (share consolidation calculation) that can be counted reached 96.707 billion yuan, an increase of more than 6% from the end of the second quarter. Among them, many funds such as Huaxia China Securities Shanghai, Shenzhen and Hong Kong Gold Industry Stock Link A, Bank of China Shanghai Gold ETF, CCB Shanghai Gold ETF, Bank of China Shanghai Gold ETF Link A, Qianhai Open Source Gold ETF Link A, CCB Shanghai Gold ETF Link A doubled their share at the end of the third quarter.

For the reasons for the recent rise in gold prices, Song Qing, general manager of the international business department of Nuan Fund, pointed out that geopolitical factors have a greater impact on gold prices than fundamental factors. Currently, the Russia-Ukraine conflict is regarded as one of the deadliest geopolitical conflicts in Europe since World War II, while the Israeli-Palestinian conflict, despite its short duration, could have a profound impact on the global political landscape. In addition, the upcoming US presidential election has increased the uncertainty of the Israeli-Palestinian conflict, and the electoral dynamics have also had an impact on gold prices.

Mr. Liu Tingyu, manager of Yongwin Gold Share ETF, believes that the record high gold price is mainly driven by two factors. First, with the approach of the US election and the geopolitical tensions in the Middle East, the market risk aversion is gradually heating up; Second, the policy outline of the US presidential candidates may further exacerbate the anti-globalization trend, triggering market concerns about the possible future of second inflation in the US, and gold, as a long-term inflation-resistant asset, is expected to benefit from long-term inflation rise.

Mr. Wang Xiang, manager of Boshi Gold ETF Fund, also pointed out that before the results of the US election, gold assets are expected to continue to maintain a strong performance, and the hedging demand for election developments and geopolitical uncertainties in the Middle East will continue to affect the performance of the gold market.

"Since May this year, global funds have returned to gold assets, and central banks have continued to buy gold. "Increasing consumer demand in the physical gold market, the new BRICS payment system and market expectations for future changes in the global payment system and reserve currency are eroding the role of the US dollar as the global reserve currency, changing market expectations for gold prices." Mr. Song added.

Experts surveyed generally believe that in the long term, gold prices still have the potential to continue to rise. However, there may be a pullback risk in the short term, and investors are advised to pay close attention to the trend of gold prices and reasonably grasp the investment rhythm.

Mr. Liu Tingyu said that the stability of the US economic data may have a relatively limited disturbance to the gold price, and whether the US economy is heading for recession or second inflation in the future, it may have a positive impact on the gold price; In the medium and long term, with the continued promotion of the Federal Reserve's interest rate reduction policy, gold ETF investors and other trading may continue to bring capital inflows, which is expected to promote gold into a new wave with the global central bank, and the subsequent rise of the US deficit ratio and the aggravation of global geopolitical risks may continue to push up the gold price.

Mr. Song Qing also believes that considering the uncertainty brought by the US presidential election, the geopolitical conflicts in the Middle East and Russia and Ukraine, and the impact on the world, the overall upward trend of gold has not changed.

He further noted that in six of the eight Fed rate cut cycles since 1980, gold prices have risen, largely reflecting a gradual decline in the opportunity cost of holding gold. In the future, if the US economy weakens more than expected or falls into recession, the US dollar index and interest rates will have further downside space, and the market risk appetite will rapidly converge, and the financial attributes and risk aversion attributes may support the gold price to further rise.

Mr. Wang Xiang believes that American enterprises are still cautious about future hiring plans, and the uncertainty caused by the US election is also one of the concerns of enterprises, but the economic performance of the United States is better than that of the euro zone. At the same time, the lower house election in Japan led to a decline in the ruling party's support, which also weakened the yen this week and supported the dollar index, which may limit gold's gains to some extent.

"In the third quarter, the US economy continues to expand, GDP data will be released, interest rate policy and inflation expectations have a neutral impact on gold prices, short-term rises are more affected by geopolitics and hedge hedging, with the landing of the election results, there may be a similar situation in 2016 profit-taking triggered large fluctuations in gold prices, investors should pay attention to trading rhythm." Mr. Wang Xiang said.

Mr. Liu Tingyu believes that the recent rise in gold prices to a high level has actually included some expectations of the Federal Reserve's interest rate cut and second inflation, and the volatility of gold prices may increase before and after the subsequent U.S. election and the Federal Reserve's interest rate meeting. If the global economy recovers or overheats, the Federal Reserve ends its interest rate cuts and begins to raise interest rates again, or the world falls into a deflationary zone simultaneously, then the gold price may face a certain risk of correction.

Mr. Song Qing suggested that investors actively pay attention to the trend of gold prices, and gradually increase the proportion of gold allocation on dips to seize gold investment opportunities.

"Given that gold prices have now reached a record high and entered an unprecedented price range, market participants will show great caution or sensitivity to this, so gold prices may suffer a sharp correction, and investors need to avoid the risk of blindly chasing higher prices." Mr. Song Qing said.