Analysis of Driving Factors for the Strength of Hong Kong Gold Stocks and Outlook on Gold Price Trends

According to the latest data, international gold prices performed strongly in 2025, rising from approximately $2641/oz at the start of the year to the current $4336.8/oz, with a cumulative increase of 64.27%[0]. This sharp rise has directly driven the stock price performance of gold-related listed companies.

Zijin Mining, as the leader of Hong Kong’s gold sector, has seen a cumulative increase of up to 143.44% this year, far exceeding the gold price increase[0]. This excess return mainly stems from:

• High leverage effect
  : The profits of gold mining enterprises are highly sensitive to changes in gold prices
• Production growth
  : The company’s gold production continues to increase, further amplifying the impact of gold price rises
• Valuation repair
  : Previous valuations were low, leading to a revaluation driven by gold price increases

The current global geopolitical environment is complex, providing sustained safe-haven demand support for gold:

• Middle East situation remains tense
  : The Syrian civil war resumed at the end of 2024, with rebel groups occupying key cities[1]
• Prolonged Russia-Ukraine conflict
  : Although peace talks have made progress, the conflict has not been fully resolved[1]
• Turbulent situation on the Korean Peninsula
  : South Korea declared martial law in early December 2024, significantly increasing geopolitical risks[1]

These geopolitical uncertainties provide a structural risk premium for gold, becoming an important factor supporting gold prices.

Market expectations for the Federal Reserve’s monetary policy shift are also driving gold prices higher:

• Rising rate cut expectations
  : The CME FedWatch tool shows that the market has priced in a 78% probability of a rate cut in January 2026[1]
• Weakening dollar trend
  : Rate cut expectations have pushed the dollar index lower, enhancing gold’s relative attractiveness
• Persistent inflation concerns
  : Although inflation has declined somewhat, long-term inflation expectations remain at a high level

Central banks around the world continue to increase their gold reserves, providing long-term support for gold prices:

• Diversification of reserve strategies
  : Central banks continue to promote the diversification of foreign exchange reserves
• De-dollarization trend
  : Against the backdrop of geopolitical tensions, central banks seek to reduce their dependence on the dollar
• Strategic value of gold
  : As a traditional financial safety asset, gold’s strategic value is increasingly prominent

The current global geopolitical pattern is highly complex and unlikely to see fundamental improvement in the short term:

• Even if a ceasefire agreement is reached in the Russia-Ukraine conflict, post-war reconstruction and relationship repair will take a long time
• Sectarian conflicts and national interest disputes in the Middle East are deeply rooted
• Great power competition has intensified the complexity of global geopolitics

The Federal Reserve’s monetary policy shift has strong certainty:

• Slowing U.S. economic growth will force the Federal Reserve to maintain loose monetary policy
• The negative impact of high interest rates on the U.S. economy is becoming apparent
• Gradual decline in inflation creates conditions for rate cuts

The supply-demand fundamentals of the gold market are undergoing positive changes:

• Growth in mine gold production is limited, and the cost of developing new mines is rising
• Investment demand for gold ETFs and physical gold is picking up
• Gold consumption demand in emerging markets is growing steadily

If there is a sudden substantive breakthrough in the Russia-Ukraine conflict, it may trigger a short-term correction in gold:

• The conclusion of a peace agreement may weaken safe-haven demand
• Improved risk sentiment may lead to capital flowing from gold to risk assets

If U.S. economic data意外走强, it may push the dollar to rebound in phases:

• A strong dollar will put pressure on gold prices
• However, this impact may be relatively short-lived

Gold prices face technical correction demand after a continuous sharp rise:

• Current gold prices are close to historical highs, increasing profit-taking pressure
• Inflows and outflows of short-term speculative funds may increase volatility

Zijin Mining currently has a PE of 18.25x and PB of 4.96x, with a relatively reasonable valuation[0]:

• Horizontal comparison
  : Compared with international gold stocks, Zijin Mining’s valuation is at a medium to low level
• Historical comparison
  : Compared with the historical valuation中枢, current valuation still has room for improvement
• Profit quality
  : ROE is as high as 30.60%, with excellent profitability[0]

Zijin Mining’s gold production is expected to continue growing in the next few years:

• New mines put into production will drive production growth
• Technical transformation of existing mines improves recovery rates
• Overseas M&A projects will gradually contribute to production

The company has obvious cost control advantages:

• Significant scale effect, with low unit costs
• Strong technical strength and high mining efficiency
• Integrated business model reduces intermediate link costs

Gold price rises have an amplifying effect on the company’s profits:

• For every $100/oz increase in gold price, the company’s EPS can increase by approximately 0.15-0.20 yuan
• High proportion of fixed costs, obvious operating leverage effect

Zijin Mining has an important position in the global gold industry:

• Gold production ranks among the top in the world
• Abundant resource reserves and great development potential
• International leading technical and management levels

The company has potential for sustained growth:

• Large space for domestic mineral resource integration
• Continuously enhanced overseas expansion capabilities
• Diversified metal layout reduces single品种 risk

• Geopolitical tensions continue, and gold’s safe-haven demand is unlikely to fade in the short term
• Federal Reserve rate cut expectations are increasingly strong, which is conducive to gold prices remaining high
• The end of the year and beginning of the year are usually peak seasons for gold consumption, with seasonal factors supporting demand

• Under the trend of global monetary system restructuring, the strategic value of gold continues to rise
• The company has excellent fundamentals and strong long-term competitiveness
• Relatively high dividend yield, with good allocation value

• Changes in monetary policies of various countries may affect gold price trends
• Stricter environmental protection policies may increase mine mining costs
• Changes in tax policies may affect corporate profits

• Overseas mines face political and exchange rate risks
• Work safety accidents may lead to production suspension and rectification
• Decline in resource grade may affect mining costs

• Sharp fluctuations in gold prices may affect investment returns
• A general decline in the stock market may drag down the performance of gold stocks
• Changes in investor sentiment may cause stock price volatility

Considering that gold prices are already at a relatively high level, it is recommended to adopt a batch position building strategy:

• Buy in batches when gold prices correct to reduce average costs
• Pay attention to important technical support levels and fundamental changes
• Avoid chasing highs when gold prices rise rapidly

For long-term investors, it is recommended to adopt a holding strategy:

• Focus on changes in the company’s fundamentals rather than short-term stock price fluctuations
• Regularly track operating indicators such as gold production and cost control
• Adjust positions appropriately but maintain core holdings

• Control the proportion of a single stock position and diversify investments appropriately
• Set stop-loss levels to control downside risks
• Closely monitor gold price trends and related policy changes

Hong Kong gold stocks have strengthened mainly driven by multiple factors including gold price rises, geopolitical risks, and expectations of the Federal Reserve’s policy shift. As a leading company, Zijin Mining has advantages such as solid fundamentals, relatively reasonable valuation, and good growth prospects.

Looking ahead, the gold price uptrend has strong sustainability, with main supporting factors including persistent geopolitical risks, high certainty of the Federal Reserve’s monetary policy shift, and strong central bank gold purchasing demand. These factors will provide sustained support for the valuation of gold stocks.

However, investors should also pay attention to potential risks such as geopolitical easing, dollar strength, and technical corrections. It is recommended to adopt investment strategies of batch position building and long-term holding, and implement good risk management measures. Overall, high-quality gold stocks still have high allocation value in the current market environment.

[0] Gilin API Data
[1] Markets Financial Content - “Gold’s Golden Glow: The Unwavering Allure of a Safe-Haven in Turbulent Times” (https://markets.financialcontent.com/wral/article/marketminute-2025-12-1-golds-golden-glow-the-unwavering-allure-of-a-safe-haven-in-turbulent-times)
[2] KITCO - “Gold pares gains as Ukraine peace talks progress, eyes on US jobs data” (https://www.kitco.com/news/off-the-wire/2025-12-15/gold-pares-gains-ukraine-peace-talks-progress-eyes-us-jobs-data)
[3] KITCO - “Gold holds firm, Fed signals and easing geopolitical tensions bolster bullish outlook” (https://www.kitco.com/opinion/2025-11-27/gold-holds-firm-fed-signals-and-easing-geopolitical-tensions-bolster-bullish)