Gold Futures Reach Record High as Institutions Shift Focus to Long-Term Opportunities in Gold Stocks

Amid the rotation of market hotspots such as innovative pharmaceuticals, artificial intelligence, and robotics throughout the first half of the year, the gold sector has remained comparatively muted. Nonetheless, last Friday saw New York Mercantile Exchange gold futures briefly climb to an intraday record of $3,534.10 per ounce.

“We maintain a strategic bullish stance on gold, viewing short-term volatility as an opportune entry point,” said Mr. Wang Jie, a proprietary trading professional at a Shanghai brokerage, in an interview with Securities Times. He added that additional catalysts are likely to drive gold prices higher in the coming months.

Mr. Wang noted that as consensus builds around a sustained uptrend in gold prices, the investment logic for gold equities is evolving. Market participants are shifting their attention from near-term production growth to companies with larger proven reserves, whose value stands to benefit most from prolonged high prices.

One of the key concerns for global gold investors remains the timing and magnitude of Federal Reserve rate cuts. Recent data showing a marked slowdown in the U.S. labor market significantly boosted September rate-cut expectations and fueled a rally in precious metals that began in August. London spot gold has gained 3.31% since the start of August. On August 8, the December contract on the New York Mercantile Exchange hit a record high of $3,534.10 per ounce, surpassing the previous peak of April 22 with an intraday advance approaching 1.5%.

Federal Reserve Vice Chair Michelle Bowman has publicly expressed support for three rate cuts this year and is scheduled to chair a community banking forum on October 9. “Rate-cut trades may resonate with de-dollarization trends, driving gold into a fresh uptrend,” wrote China International Capital Corporation in its latest research report. Zhongtai Securities added that as rate-cut expectations strengthen and global economic and political uncertainties mount, gold could experience recurring rallies that establish a steady upward trajectory, reflecting both concerns about the economic outlook and gold’s appeal as a safe-haven asset.

Sustained purchases by central banks remain a core driver of higher gold prices. According to data released by the State Administration of Foreign Exchange on August 7, China’s official gold reserves reached 73.96 million ounces at the end of July, up 60,000 ounces from June. Since resuming purchases in November last year, the People’s Bank of China has increased its gold holdings for nine consecutive months.

“Official gold reserves rose for the ninth straight month through July 2025, although the monthly increment has remained modest for five months, in line with market expectations,” said Wang Qing, chief macro analyst at Oriental Jincheng. He explained that continued accumulation reflects geopolitical and economic shifts under the new U.S. administration, making gold more likely to sustain upward pressure. This reduces the urgency to halt purchases from a cost-control perspective and strengthens the case for diversifying international reserves.

Wang added that central banks’ strategic direction remains focused on gold. At the end of July 2025, gold accounted for 7.0% of China’s official international reserves—well below the 15% global average. To optimize reserve composition, further gold purchases and moderate reductions in U.S. Treasuries are warranted. Gold’s universal acceptance as a settlement asset bolsters sovereign currency credibility and facilitates cautious advancement of the renminbi’s internationalization.

According to the World Gold Council, second-quarter global central bank gold purchases, while at their lowest quarterly level since 2022, still exceeded the 2010–2021 quarterly average by 41%. The Council indicated that higher prices may have tempered some buying, but given ongoing geopolitical and economic uncertainties, central bank purchases remain at elevated levels and are expected to continue over the next 12 months.

Institutional investors continue to favor long-term opportunities in gold stocks. Kaiyuan Securities commented that “rate-cut trades” and a potential “Trump 2.0” narrative will serve as dual catalysts throughout 2025, with central bank buying under trade protectionism and geopolitical pressures providing a firm floor beneath gold prices.

“Early in a gold price uptrend, our focus is on companies with rapidly expanding production capacity, since their profits can surge quickly as capacity and prices rise,” Mr. Wang told Securities Times. He further noted that if gold prices remain elevated for an extended period, companies with large, mature mines will attract more attention. Having largely completed their fixed-asset investments, these mines will generate increasing free cash flow the longer high prices persist.