"Iranian hot war" pushes up gold prices, will the gold sector see more waves?

"When the cannons roar, gold is worth ten thousand taels." With the sudden attack by the United States on Iran, the Middle East is once again engulfed in flames of war. Due to this impact, according to data from GoldPrice.org, international gold prices briefly exceeded 1230 yuan/gram, with an increase of over 4%, just less than 30 yuan away from a new high, before quickly falling back to erase the gains. On February 28, the United States and Israel announced that they had launched strikes against Iran from the air and sea, prompting Iran to retaliate against military targets of Israel and the United States in the Middle East. As a result of this event, both gold and oil prices surged significantly, with international gold prices breaking past 1230 yuan/gram before quickly falling back, with prices dropping to around 1170 yuan/gram on March 1. It is worth noting that since the Spring Festival, the price of gold has risen by 10%. The recent rise in gold prices is mainly influenced by Trump's policies. On one hand, the pressure from the United States on Iran has been escalating, with the largest military deployment in the Middle East since the Iraq War of 2003, which was further accelerated after the sudden attack. On the other hand, the "tariff policy" has caused uproar, with Trump recently announcing a 15% tariff on global imports, leading to an increase in demand for safe-haven assets such as precious metals. Most investment banks are bullish on the future market. EB Securities stated that given Trump's tariff policy and the ongoing uncertainty in the Middle East, they still maintain a positive outlook on gold prices for the year. If the Federal Reserve continues to cut interest rates in the second half of the year, and political uncertainty between the United States and other countries persists, it is likely to support a rise in gold prices. The Chairman of the Hong Kong Gold Exchange, Zhang Dexi, predicts that gold prices will make a slight adjustment before rising again in the second and third quarters of the year, challenging the $6000 per ounce level. Investment in gold is on the rise due to geopolitical disturbances in the Middle East First and foremost, the price of gold is determined by supply and demand. Gold is considered a strategic asset, with physical demand mainly coming from jewelry and ornaments, making up a small portion of overall demand. The value storage and safe-haven properties of gold contribute to its investment demand, which is the primary driving force behind gold prices. According to investment bank reports, gold demand can be divided into four main dimensions: jewelry and ornaments accounting for 29% of demand, technological demand accounting for 6%, and investment and central bank purchases accounting for 43% and 21% respectively, totaling nearly 70%. It is evident that investment demand for gold has been driving the continuous rise in gold prices. In particular, central bank purchases have averaged over a thousand tons in the past four years, with global central banks increasing their gold reserves since 2024. According to data released by TradingEconomics on January 27, as of January 2026, the top ten countries with the highest gold reserves were the United States, Germany, Italy, France, Russia, and China, with reserves of 8133 tons, 3350 tons, 2452 tons, 2437 tons, 2330 tons, and 2306 tons respectively. This continuous increase in reserves, coupled with secondary market investments, has led to gold prices continually reaching new highs, with a sharp increase in 2025, exceeding 60%. Investment demand for gold mainly stems from its safe-haven properties. Looking at the historical trajectory of gold prices, every increase in price has been accompanied by a decline in the US dollar index, rate cuts by the Federal Reserve, expansion of US government debt balances, and an escalation of geopolitical risks. These highly sensitive factors primarily influence investment demand for gold as a safe-haven asset. In recent years, conflicts in Russia and Ukraine, the Middle East, and the United States' conflict with Middle Eastern countries, especially Trump's unfriendly policies, have continuously stimulated global demand for safe-haven investments, combined with inflation, which has led to an increase in gold prices. With the recent US attack on Iran and the escalation of geopolitical conflicts in the Middle East, gold prices are expected to rise to a new level. From an investment perspective, since the collapse of the US gold standard in 1971, gold prices denominated in US dollars have seen an average annual increase of 9% over the past half-century, outperforming other assets. The consistency of positive returns in both economic prosperity and recession has given gold its unique resilience, delivering stable returns in various market conditions. During periods of economic uncertainty, countercyclical investment demand drives gold prices upwards, whereas during economic expansion, demand from cyclical consumers supports its performance. Currently, gold prices have undergone a deep adjustment before the Chinese New Year, clearing out both short-term profit-taking and hedging positions. The rebound during the Chinese New Year period has raised the cost basis for new bullish investors, forming a new support line. However, gold prices have now reached a key resistance level at the previous high. As reported by the media, the conflict between the United States and Iran may last for several weeks, providing strong support for an increase in gold prices, possibly leading to a W-shaped trend. It is worth noting that the increase in gold prices may put some pressure on physical demand for gold jewelry, but as this demand accounts for a small percentage overall, the impact is minimal. The expectation of rising gold prices will also bring significant investment opportunities to the gold industry chain, especially for upstream gold mines. Strong expectations for an increase in prices, focusing on high-quality gold mine targets The fallout from the US attack over the weekend and subsequent retaliation from Iran has escalated the conflict in the Middle East, leading to increased tensions. On the morning of March 2, the gold sector is expected to experience some activity in trading. Among these, the gold mining sector is likely to benefit first, with companies like Zijin Mining Group, ZIJIN GOLD INTL, ZHAOJIN MINING, and Chifeng Jilong Gold Mining, which are leading players in the gold mining sector, well-positioned to attract investment. Zijin Mining Group is involved in precious metals and non-ferrous metals, with a dominant market position. It ranks in the top five globally for copper reserves and copper production, as well as sixth for gold reserves and gold production. In 2025, the company achieved a gold production of 90 tons, surpassing the initial guidance of 85 tons at the beginning of the year. According to its production guidance for 2026, it plans to produce 105 tons of gold, with a goal of reaching 130-140 tons by 2028, maintaining a growth trend. The company's market value increased by more than 1.6 times in 2025, with a growth of over 26% so far this year. ZIJIN GOLD INTL is the core gold asset of Zijin Mining Group that listed independently. It has shown excellent performance, with an average compound annual growth rate of gold production of 21.4% from 2022 to 2024. In 2025, the company continued to see double-digit growth rates, with a gold production of 46.5 tons, accounting for over half of Zijin International's production. The company plans to increase its production to 57 tons by 2026. In terms of financial performance, the company's revenue has grown by an average of over 30% from 2023 to 2025, with net profit exceeding 100%, leading to a projected net profit for shareholders of $1.5-1.6 billion in 2025, representing a year-on-year growth of 212%-233%. Moreover, the recent announcement of a cash offer to acquire all outstanding common shares of Joint Gold at 44 Canadian dollars per share has garnered attention. Core assets of Joint Gold include the producing Sadiola gold mine in Mali, the Ivorian gold mining complex (including the Bonikro and Agbaou gold mines), and the Kurmuk gold mine in Ethiopia, scheduled to commence production in the second half of 2026. This acquisition is expected to significantly increase the company's gold production and, with the upward trend in prices, performance is likely to see sustained growth. The company went public in September 2025 and has shown a positive trend since then, with a current price increase of 2.26 times the issue price and a market value of 625.73 billion Hong Kong dollars. Chifeng Jilong Gold Mining owns and operates six gold mines with a combined resource volume of 390 tons. Through technology upgrades and acquisitions, the production of refined gold has steadily increased to 15-16 tons, with overseas mines accounting for approximately 70-80% of the production. However, the company is concurrently advancing multiple technology upgrade projects, with the Saipan gold-copper mine planning to increase annual gold production to 7 tons over 27 years, and the Vasa gold mine aiming to achieve an annual gold production of 6.2-7.8 tons by the end of 2028, with a future increase to 7.8-10.9 tons. The company has also shown strong performance, with high revenue and net profit growth rates. Net profit growth has been particularly rapid, and based on forecasts, the company is expected to achieve a net profit for shareholders of 3-3.2 billion yuan in 2025, representing a year-on-year growth of 75%-86%, with growth reaching 119% in 2024. The company debuted on the Hong Kong Stock Exchange in March 2025 and has since seen an upward trend, with the current price being 1.89 times the issue price and a market value of 75.37 billion Hong Kong dollars. In conclusion, the rise in gold prices is primarily driven by investments, with historical trends showing that under the resonance of risk aversion, inflation, and geopolitical conflicts, gold prices ignore economic cycles and see long-term bullish trends. The recent US attack and the escalation of Middle Eastern conflict are likely to accelerate the rise in gold prices in the short term. With expectations of higher prices, the gold mining sector is expected to continue its upward trend, with a focus on high-quality gold targets listed in Hong Kong, such as Zijin Mining Group, ZIJIN GOLD INTL, ZHAOJIN MINING, and Chifeng Jilong Gold Mining.