Stagflation Concerns Rise as Hong Kong Gold Stocks Plummet; International Gold Prices Fall by $600 in Nearly Half a Month

Cailian Press, March 19 (Editor: Feng Yi)
Affected by liquidity tightening, recent Hong Kong gold stocks have retreated from high levels, losing their safe-haven attributes.

As of press time, gold stocks collectively plunged again after the Federal Reserve announced its interest rate decision. Lingbao Gold (03330.HK) fell more than 13%, China Gold International (02099.HK) and Zijin Gold International (02259.HK) both dropped over 9%, and several other stocks like Shandong Gold (01787.HK) fell more than 7%, hitting new short-term lows.

On the news front, spot gold declined by 0.48% intraday, breaking below $4,800 per ounce. Since early March, international gold prices have been steadily falling from high levels, losing about $600 over the past two weeks.

Additionally, early Thursday morning, the Federal Reserve announced it would keep the federal funds rate target range at 3.5% to 3.75%, for the second consecutive pause.

At the press conference, Fed Chair Jerome Powell’s confidence in the decline of tariff-driven inflation weakened further compared to January, also sparking market expectations of “stagflation,” which directly impacted gold prices.

CITIC Securities research also pointed out that after each Middle East conflict, the medium-term trend of gold prices depends on the US dollar’s credit and liquidity factors.

Over the past week, crude oil prices and the US dollar index have both “broken the hundred mark,” becoming some of the few safe-haven assets still able to siphon market liquidity amid geopolitical risks.

Conversely, with rate cut expectations continually pushed back and compounded by geopolitical shocks, international gold prices face three bearish factors: a strong dollar, interest rate environment, and liquidity risks.

The market generally believes that the future direction of US monetary policy is highly uncertain. Recent tensions in the Middle East have added more variables to oil prices and US inflation trends.

Looking ahead, CITIC Futures suggests that in the medium term, if energy shocks persist and dampen growth expectations, gold may still attract funds within a stagflation trading framework; if oil supply risks significantly ease and US Treasury yields continue to rise, the upward momentum of gold prices may temporarily slow down.

(Cailian Press, Feng Yi)