Since this year, the price of gold has risen by more than 29%, and optimism about interest rate cuts in the US has fueled recent gains. Thanks to the continued rise in gold prices, many listed gold mining companies are currently expected to perform well in the first three quarters.

Gold stocks in Hong Kong A and Hong Kong rose collectively. Among them, Shandong Gold rose 4.56%, while Zhaojin Mining, Lingbao Gold, and Zijin Mining rose more than 3%.

In the A-share market, Xiaocheng Technology rose more than 8%, Sichuan Gold, Shanjin International, and Chifeng Gold rose more than 3%, and Shandong Gold, China Gold, and Western Gold followed suit.

A number of mining companies are expected to perform well in the first three quarters

Recently, several gold mining companies announced their performance forecasts for the first three quarters. According to preliminary estimates, the net profit attributable to owners of the parent company in the 1st to 3rd quarter of 2024 is expected to be 1.85 billion yuan to 2.25 billion yuan, an increase of 0.505 billion yuan to 0.905 billion yuan compared with the same period last year, and an increase of 37.52% to 67.26% year on year.

It is estimated that the deducted non-net profit attributable to the owners of the parent company will be 1.877 billion yuan to 2.277 billion yuan in the first three quarters of 2024, an increase of 0.597 billion yuan to 0.997 billion yuan compared with the same period last year, an increase of 46.68% to 77.93% over the previous year.

According to the performance forecast disclosed by Yamakin International, net profit attributable to shareholders of listed companies for the first three quarters is expected to be 1.68 billion yuan to 1.73 billion yuan, an increase of 50.22% to 54.69% over the same period of the previous year; it is expected to deduct non-net profit of 1.7 billion yuan to 1.8 billion yuan, an increase of 56.32% to 65.51% over the same period last year; and the basic earnings per share are expected to be 0.605 yuan to 0.623 yuan.

According to the announcement issued by Hunan Gold on October 14, the company is expected to achieve net profit attributable to shareholders of listed companies in the first three quarters of 2024 of 0.647 billion yuan to 0.689 billion yuan, an increase of 68.5% to 79.4% over the same period of the previous year; it is expected to achieve 0.651 billion yuan to 0.693 billion yuan after deducting non-net profit, an increase of 68.56% to 79.52% over the same period last year; and a basic earnings profit of 0.54 yuan to 0.57 yuan per share.

Judging from the announcements of the three companies, they all mentioned the rise in gold prices.

Shandong Gold pointed out that the company strengthened its strategic leading role in the first three quarters, focusing on strengthening production organization, continuously optimizing production layout, strengthening technology management and technological innovation, and improving production operation rate and resource utilization; continuously deepening cost reduction and efficiency, improving the level of fine management, improving operating efficiency, and stabilizing production costs through scientific and technological innovation, process optimization, asset revitalization, centralized procurement, and policy effectiveness; at the same time, the rise in gold prices in the 1st to 3rd quarter of 2024 and the merger and acquisition of Shanjin International (formerly “Yintai Gold”) also boosted the company's profits.

Yamakin International said that the year-on-year increase in net profit during the reporting period was mainly due to rising gold and silver prices and increased sales.

Hunan Gold also said that the main reason for the increase in performance during the reporting period was the year-on-year increase in sales prices of the company's gold, antimony and tungsten products.

Institutions: Gold prices may continue to benefit from the Fed's two-line logic of interest rate cuts and safe-haven premiums

Since this year, international gold prices have repeatedly reached new highs, and prices have soared by more than 28%; domestic spot gold prices have also reached historic highs, breaking through 600 yuan/gram at one point. As of now, London's spot gold is reported at $2666.98 per ounce.

At the same time, the importance of gold as a safe-haven asset is becoming increasingly prominent. Recently, central bank officials from countries such as Mexico, Mongolia, and the Czech Republic have publicly expressed their support for increasing gold reserves on various occasions.

They believe that in the current context of heightened geopolitical tension and falling interest rates, the share of gold in the country's foreign exchange reserves may continue to increase in the next few years.

Looking ahead to the fourth quarter, the prospects for gold investment are still worth looking forward to.

Goldman Sachs raised its gold price forecast for early 2025 from 2,700 US dollars to 2,900 US dollars per ounce in a report. The reason is that as the West and China cut interest rates, exchange traded fund (ETF) capital flows gradually increased, and central bank purchases increased.

We reaffirm our proposal to go long on gold, which will gradually be boosted by lower global interest rates, structural increases in central bank demand, and the benefits of gold as a hedge against geopolitical, financial, and economic downturn risks.

Guosheng Securities also pointed out that in the medium to long term, the safe-haven properties of gold as an alternative to non-US assets will gradually become prominent when the downward pressure on the economy heats up. The increase in gold holdings by central banks around the world is expected to continue. Non-speculative positions support the price of gold when the Fed falls short of expectations or when interest rate cuts move backwards. In the long run, the price of gold will continue to benefit from the two-line logic of the Fed's interest rate cut space and safe-haven premium.