Gold breakout rally sends Chinese bullion stocks near highs as central banks keep buying
Sovereign-debt risks and reserve diversification seen helping revive investor optimism in the precious-metals market
A rebound in gold prices has pushed shares of Chinese producers of the precious metal near record highs, while the bullion’s status as a strategic investment remains intact amid global central bank buying and financial stress in the world’s key economies.
Shares of Zijin Mining Group and Chifeng Jilong Gold Mining Group, the nation’s biggest metal producers, have risen at least 40 per cent from July lows in Shanghai, approaching all-time highs set earlier this year. A gauge of mainland-listed gold stocks has gained about 25 per cent from the low, according to data provider Shanghai DZH.
The reversal of the downtrend in gold stocks followed a similar pattern of bullion prices, which have risen 12 per cent over the past month in New York after tumultuous sell-offs triggered by the oil shock.
This month, gold broke out of its 50-day moving average, a key technical level, bolstering the argument that months of turmoil in the metal market may have run their course. China and Poland led central-bank buying in the second quarter, partially countering the sell-offs from exchange-traded funds (ETFs) and speculative positions.