China Securities Construction Investment: The Federal Reserve's interest rate cut cycle is expected to continue, which will inject new impetus into the rise in gold prices

China Securities released a research report saying that marginal demand has strengthened the explanation for gold pricing. After returning to the traditional supply and demand logic, due to the relatively stable supply of gold, the annual output is basically maintained at about 3,600 tons, so the real pricing variable of gold is 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 for ETFs in Europe and the United States (private sector investment demand in Europe and the United States, mainly for overseas institutional investors), and its demand or investment framework mainly depends on the real interest rate of US Treasury bonds. The private sector investment demand (ETF demand, etc.) in Europe, America and other regions still shows a strong correlation with the real interest rate of US Treasury bonds, and with the decline in US inflation and the decline in labor market resilience, the Federal Reserve's interest rate cut expectations in the second half of the year are heating up, and the decline in nominal interest rates and real interest rates driven by interest rate cuts will inject new impetus into the rise of gold.