A-shares precious metals sector strengthens in afternoon trading; institutions: gold value increases amid stagflation risks

On March 17, the A-shares precious metals sector strengthened in the afternoon, with Zhaojin Gold (000506.SZ) rising over 4%, and stocks such as Chifeng Gold (600988.SH), Hunan Silver (002716.SZ), Shengda Resources (000603.SZ), Shandong Gold (600547.SH), and Xiaocheng Technology (300139.SZ) also gaining.

On that day, spot silver surged over 2 intraday, and as of the time of publication, it was up 1.64% at $82.449 per ounce; spot gold rose above $5,040 per ounce intraday, with the latest at $5,030.83 per ounce.

According to media reports, on March 17, U.S. President Trump stated that U.S. military actions against Iran would not end this week and hinted that U.S. forces might attack Iran’s key oil export hub, Hormuz Island, and its oil infrastructure. The escalation of geopolitical tensions has boosted market risk aversion, leading funds to flow into safe-haven assets like gold.

China Securities states that the value of gold allocation will re-emerge after panic-driven liquidity concerns ease. The People’s Bank of China continued to increase gold holdings in February to boost market confidence. Meanwhile, if the Federal Reserve is forced to cut interest rates unexpectedly due to rising oil prices amid political pressure, it could irreversibly damage confidence in petrodollars. In the long term, conflicts may push oil prices higher, and inflation expectations could also rise. Stagflation might become the main theme of future markets. Coupled with the implementation of the Fed’s balance sheet reduction policy, this could pose unhedgeable risks to long-term U.S. Treasuries, making gold a worthwhile addition.

Despite international oil prices retreating on Monday, the market remains cautious about the recent surge in energy prices and its impact on U.S. inflation prospects and the Fed’s rate cut path. Some investors took profits ahead of this week’s Federal Reserve policy meeting. Gold and silver futures on the New York Mercantile Exchange both declined on Monday. By the close, April gold futures settled at $5,002.20 per ounce, down 1.18%; May silver futures settled at $80.682 per ounce, down 0.81%.

Tianfeng Securities notes that, overall, despite ongoing geopolitical conflicts, gold prices have generally declined since the outbreak of the conflict, indicating that war is not the sole factor. Uncertainty about inflation expectations, the timing of Fed rate cuts, and concerns over monetary policy tightening are limiting further gains in gold. U.S. February non-farm payrolls fell short of expectations, and high oil prices have raised inflation concerns. In the context of stagflation risks, gold’s value is increasing, awaiting the end of liquidity shocks and a return to fundamental value.