In recent months, the gold market has showcased a remarkable ascent, with prices approaching the $3,000 per ounce markAs of February 14th, data from the COMEX indicated that the futures prices for gold had risen nearly 10% since the beginning of the year, peaking at an impressive $2,968 per ounceThis surge has piqued the interest of many investors, leading to a significant uptick in gold exchange-traded funds (ETFs), which have also marked substantial yield gains, with some products recording increases higher than 10% in 2023 alone.

On February 11th, the New York Mercantile Exchange witnessed gold futures once again surpass the $2,960 per ounce threshold, thus setting new historical recordsTo contextualize this price surge, it’s essential to acknowledge that the gold bull market has been persistent for over a decadeIn late 2015, the COMEX gold futures were traded below $1,100 per ounce, and since then, the price has seen a continuous ascent, culminating in an estimated increase of over 13% in 2023 and over 27% projected for 2024.

The multifaceted nature of gold as a commodity, currency, and safe-haven asset contributes significantly to its climbing valueGeopolitical uncertainties, particularly in the Middle East, compounded by U.S. tariff policies, have left investors on edge, fostering an environment conducive to increased investment in goldAs traditional safe-haven asset seekers swell the demand, gold’s value naturally rises amid this turbulence.

Central banks globally have been reportedly hoarding gold at unprecedented levels, which provides further support for the rising priceAccording to the World Gold Council, the total amount of gold purchased by central banks has exceeded 1,000 tons for three consecutive years, with projections for 2024 reaching approximately 1,044.6 tonsCountries such as China, Poland, and India have ramped up their gold acquisitions, not only boosting market demand but also sending a strong positive signal to investors, thus layering more momentum onto gold’s rising price trajectory.

The performance of gold-themed ETFs has been particularly noteworthy, with data indicating that, as of mid-February, there are about 20 gold-centric ETFs—encompassing both commodity and equity types—that have shown a remarkable return of over 11% this year

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With an average yield of 12.21%, the ETFs showcase a robust outperforming trend against the broader marketThe equity-based ETFs have all registered gains of over 13%, illustrating a compelling investment opportunity amidst a thriving gold market.

Among these funds, the Yongying CSI Hong Kong-Shenzhen Gold Industry Equity ETF leads the charge with a year-to-date net asset increase of 14.39%. Its top holdings include Shandong Gold and Zijin Mining, both of which have experienced impressive annual stock price hikes, reflecting the underlying strength of the gold industry’s leading companies.

The momentum created by gold ETFs continued from last year, during which ten of the funds achieved return rates exceeding 27%. Prominent firms in the space capitalized on this environment, with Zijin Mining forecasting a net profit of around 32 billion yuan for 2024, which marks an approximate 51.5% increase year-on-yearSimilarly, Chifeng Jilong Gold’s expected net profit range is remarkable, projecting a 115% to 124% increase from the previous annual figures.

The surge in investor interest is evidenced by substantial inflows into gold-themed ETFs, with net contributions reaching an overall 4.95 billion yuanMajor funds such as the Huaan Gold ETF and the Guotai Gold ETF have individually attracted more than 1.5 billion yuan, corroborating the trend that has caught the attention of many new investors seeking refuge in gold.

As of February 14th, gold-themed ETF assets have surpassed a cumulative net asset value of 85.6 billion yuan, increasing significantly since the end of the previous year by about 13 billion yuan, or about 18%. Notably, numerous ETFs, like the Huaan Gold ETF and the E Fund Gold ETF, have exceeded the 10 billion yuan mark in net asset value, signaling robust growth in this investment sector.

In its latest quarterly report, the Huaan Gold ETF highlighted three primary factors contributing to gold’s stellar performance: the anticipated initiating of interest rate cuts by the Federal Reserve in September 2024, ongoing global financial stability concerns leading to further accumulation of gold by central banks, and an accelerated pace of policy changes that enhances gold’s asset allocation value amidst rising uncertainties across different asset classes

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