Several Gold Companies Anticipate Positive Earnings; Market Risk-Aversion Sentiment Heats Up, Driving Precious Metals Sector to Strengthen Against the Trend [SMM Newsflash]

SMM January 22 News:

The US has not yet announced a clear tariff plan but hinted at the possibility of imposing tariffs on Canadian and Mexican goods as early as February 1. Amid economic and geopolitical uncertainties, market demand for safe-haven assets such as precious metals has increased. With the US dollar index declining for two consecutive trading days, falling back to around 108, the weakening US dollar has driven gains in precious metal futures and stocks. As of 15:13 on January 22, COMEX gold rose 0.14% to $2,763/oz; COMEX silver rose 0.11% to $31.53/oz; SHFE gold rose 1.28%; SHFE silver rose 0.81%.

In the stock market: The resilience of precious metal futures prices and the positive performance forecasts of several precious metal companies led the precious metals sector to rise against the trend, topping the industry gainers' list on January 22. By the close of trading on January 22, the precious metals sector was up 1.96%. Among individual stocks, Shandong Gold rose nearly 5%, with Shanjin International, Yulong Co., Xiaocheng Technology, and Chifeng Gold among the top gainers.

News

The US has not provided specific details on imposing general tariffs or additional tax surcharges on major trading partners but hinted at the possibility of imposing tariffs on Canadian and Mexican goods as early as February 1. The US Fed will hold a meeting next week, and the market will focus on the performance of US Treasury markets. The market expects the Fed to keep interest rates steady this month while remaining vigilant about inflation.

In 2024, COMEX gold posted an annual gain of 27.39%, while COMEX silver rose 19.31%. SHFE gold and SHFE silver recorded annual gains of 28.29% and 24.25%, respectively. The upward trend in precious metal prices has benefited many precious metal companies, with several already announcing performance growth forecasts for 2024.

Zijin Mining announced on the evening of January 21 that, based on preliminary estimates by its financial department, it expects to achieve a net profit attributable to shareholders of publicly listed firms of approximately 32 billion yuan in 2024, up about 51.5% YoY compared to 21.119 billion yuan in the previous year. In 2024, the company's main metal ore products saw both volume and price increases, cost pressures were effectively curbed, overseas subsidiaries improved operational capabilities, and profitability was enhanced. Additionally, the company outlined its 2025 production plans for major mineral products as follows: mined copper 1.15 million mt, mined gold 85 mt, mined zinc (lead) 440,000 mt, lithium carbonate equivalent 40,000 mt, mined silver 450 mt, and mined molybdenum 10,000 mt.

Hunan Gold released its performance forecast on the evening of January 21, projecting a net profit attributable to shareholders of 783 million–929 million yuan in 2024, up 60%–90% YoY. The increase in performance was mainly due to higher YoY selling prices for the company's gold and antimony products during the reporting period.

Lingbao Gold Group Co., Ltd. issued a positive profit forecast on January 20, expecting full-year 2024 revenue of approximately 11.587 billion–11.903 billion yuan, up 10%–13% YoY, and net profit of approximately 617 million–706 million yuan, up 110%–140% YoY. In its profit forecast, Lingbao Gold attributed the revenue and profit growth to multiple measures taken by the group, including overcoming policy and infrastructure renovation impacts in H1, ramping up production in H2, optimizing mining and beneficiation technologies, achieving significant results in refined management reforms, and improving overall operational efficiency. The group also benefited from rising gold prices for its main products during the corresponding period.

Downstream Procurement Mainly Just-in-Time; Most Traders Gradually Enter "Holiday" Mode

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In the spot market: SMM #1 silver posted a 24.9% gain in 2024. Entering 2025, precious metal prices have remained resilient, with the price center of SMM #1 silver spot continuing to trend upward. On January 22, the reference ex-factory average price of SMM #1 silver in the morning was 7,782 yuan/kg, up 62 yuan/kg from the previous trading day, an increase of 0.8%.

According to SMM, on January 22, large-volume cash spot transactions for national standard silver ingots in the Shanghai area were quoted at a discount of around 2 yuan/kg. On the 22nd, downstream procurement was mainly just-in-time, with most traders preparing for the holiday and most ceasing operations by this Friday.

Institutional Comments

Kelvin Wong, Senior Market Analyst for Asia-Pacific at OANDA, stated: "There remains some uncertainty around US trade policy, which creates significant uncertainty for the US dollar's trajectory. The US dollar is a key short-term catalyst for gold prices."

ANZ Bank expects gold prices to average above $2,738/oz in 2025.

Eric Strand, founder of AuAg Funds, stated in his 2025 outlook report that gold prices are expected to exceed $3,000/oz this year. "We predict that gold prices will break the $3,000 level this year and could rise further, with a realistic target of $3,300." Strand's bullish target represents a 20% increase from current levels. He also noted that the new US administration could usher in an era of government stimulus and loose monetary policy.

Shawn Khunkhun, CEO of Canadian silver exploration and development company Dolly Varden Silver, recently expressed a bullish view on silver prices in an interview, stating that he expects silver to "significantly outperform gold" by 2025. With years of experience in the precious metals market, Khunkhun believes his previously set target of $73 for silver prices is just the beginning.

Huayuan Securities pointed out that the outlook for non-ferrous metals in 2025 remains positive, with the upward logic for gold prices unchanged. The dual themes of "interest rate cut trades" and "Trump 2.0" are expected to continue driving catalysts. Central bank gold reserves provide strong bottom-line support for gold prices. In the short term, expectations for US Fed interest rate cuts in 2025 and tariff policies driving inflation expectations may dominate gold price trends. In the long term, under the backdrop of dual easing in US monetary and fiscal policies, US dollar credit contraction, and de-dollarization, gold is expected to maintain upward momentum in the medium and long term.

Guotai Junan recommends a strategic overweight on gold for the entire year. In the medium and long term, the US faces significant challenges in fiscal reduction, and US dollar credit may remain under scrutiny. Global central banks continue to allocate gold periodically. Against the macro backdrop of de-globalization and changes in global order, geopolitical conflicts are expected to remain frequent, supporting gold's performance as a safe-haven asset.

A research report by CITIC Securities highlighted a positive outlook for gold prices in 2025 based on its gold price analysis framework. Global central bank gold purchases are expected to continue, with the announcement effect of such purchases becoming more pronounced. Global market enthusiasm for gold investment may persist, with a structural trend of "decline in Asia, rise in Europe and the US." Geopolitical conflicts in regions such as the Middle East and Russia-Ukraine are expected to become more unstable in 2025, favoring gold price increases. In the medium term, cryptocurrencies and gold are not expected to compete in safe-haven allocations. Under a neutral assumption, the model predicts that COMEX gold futures prices could exceed $3,100/oz by mid-2025.