Hong Kong gold miners rally as bullion holds above $4,000

Hong Kong gold miners rallied Tuesday as bullion held above $4,000 an ounce, with China Gold International (02099.HK) jumping 5.89 percent.

"Gold remains in an explosive price phase that began in August 2024, with models pointing to a year-end fair value near $4,700 an ounce," Michael Hsueh, a metals analyst at Deutsche Bank, said.

Lingbao Gold (03330.HK) gained 3.69 percent and Zijin Mining (02899.HK) advanced 1.69 percent as of report time. Spot gold closed at $4,029.84 an ounce Monday, down 0.3 percent, after bottoming at $3,959.33 on June 24 and peaking at $5,595.47 on January 29. Central banks bought 289 tonnes in the second quarter, a record for any second quarter and five times the 57 tonnes purchased in the first.

The sustained bullion price above $4,000 is a direct earnings driver for gold producers, whose margins expand with every dollar of metal price. Continued strength could lift gold mining equities across other exchanges, including A-shares and U.S.-listed miners, as investors seek exposure to the precious metals complex.

The rally in Hong Kong gold stocks tracked a broader advance in bullion, which has held above the $4,000 threshold since late June. Deutsche Bank's models, run by Hsueh and colleague Bryant Xu, put gold's fair value near $4,700 an ounce by year-end, above the bank's $4,600 fourth-quarter forecast. The World Gold Council, by contrast, expects gold to trade within 5 percent of $4,100 for the rest of the year, capping the range near $4,305.

Central bank demand underpins the bullish case. Poland took 51 tonnes in the second quarter and China 33 tonnes, part of the record 289-tonne quarterly haul. Every extra 20 to 30 tonnes above the usual 600 tonnes a year lifts gold by about 1 percent, the council said. The buying has helped gold recover from its June 24 low of $3,959.33, though it remains well below the January 29 peak of $5,595.47.

Bullion's Range Hinges on Fed Path

Traders expect the Federal Reserve to raise rates before October under Chairman Kevin Warsh, a move that would make gold less attractive to hold. Higher rates pressure bullion, which pays no yield, and could cap gains for gold miners. The metal's next test comes with U.S. employment data this week, which will shape the Fed's September decision.

For Hong Kong-listed producers, the metal's level above $4,000 translates directly into higher realized prices and fatter margins. Zijin Mining, the largest of the three, also benefits from copper exposure, while China Gold International's operations in Inner Mongolia and Tibet give it direct leverage to bullion. A sustained rally would likely pull in A-share gold names and U.S.-listed miners such as Newmont and Barrick Gold, extending the sector's advance across exchanges.

The move also reflects broader safe-haven demand as investors weigh geopolitical uncertainty and inflation risks. Gold's resilience above $4,000, even as the dollar holds steady, shows that bullion's structural support from central banks and retail investors remains intact. For Hong Kong's gold complex, that keeps the earnings outlook constructive through the second half.

This article is for informational purposes only and does not constitute investment advice.