Geopolitical Risk Premium Combined with Rate Cut Headwinds, Precious Metals in Tug-of-War, Institutions Optimistic on Long-term Allocation Value

2026-03-18 06:10:28

On March 17, the A-share precious metals sector strengthened in the afternoon, with Chifeng Gold and Shandong Gold rising over 2%, while Hunan Silver, Shengda Resources, Zijin Mining, and others followed suit; earlier, spot silver rose over 2.00% intraday to $82.33 per ounce. The non-ferrous metals mining ETF (159690) increased by 0.73%.

Huaxi Securities pointed out that in the short term, ongoing Middle East geopolitical tensions continue to boost safe-haven sentiment and oil price expectations. If oil prices remain high, they will raise U.S. inflation expectations, reduce room for rate cuts, and suppress gold prices. In the medium to long term, this gold rally is mainly due to the decline in the dollar’s dominance; international distrust in the dollar may have become a historic trend, providing long-term support for gold.

Founder Securities stated that in the short term, precious metals may fluctuate due to the Fed’s rate cut delay or hike expectations, but central bank gold purchases and bullish demand are expected to provide support. In the medium to long term, if stagflation expectations gradually clarify and the Fed’s room for rate hikes is limited, precious metals are likely to outperform significantly, offering good opportunities for equity market investments.

The non-ferrous metals mining ETF (159690), tracking the non-ferrous metals industry index, is heavily focused on the upstream segment of the metals supply chain—mineral resource extraction. As of February 27, copper, gold, rare earths, and aluminum accounted for 65% of the index’s weight (according to Shenwan’s third-level industry classification).

When prices of non-ferrous metals (such as copper, gold, lithium) rise, upstream companies’ profits increase directly and rapidly, making the non-ferrous metals mining index more price elastic with a higher beta. Historically, as of March 13, the cumulative ten-year return of the non-ferrous metals mining index was 258.29%.

Risk reminder: Funds carry risks; investments should be made cautiously.

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