When gold begins to correct, how should the base metals sector be viewed? Huabao Fund's Base Metals ETF (159876) drops sharply by 4%, presenting a potential opportunity for investors to buy the dip.

Yesterday (March 18), international gold prices suddenly plummeted, with spot gold falling 3.86%, breaking below the $4,900 per ounce level, hitting a one-month low.

Has the “buy gold in turbulent times” strategy become ineffective? Why is gold falling abnormally? Due to Middle East geopolitical disturbances, the Strait of Hormuz transportation has been disrupted, and energy and chemical prices continue to rise, directly boosting inflation expectations in Europe and the US. This has forced the market to cut back on rate cut bets, with the two-year US Treasury yield once surpassing 3.75%. As the US dollar index rebounded strongly, international commodity prices for gold, silver, and copper were suppressed.

This round of geopolitical shocks, through the “inflation—interest rates—liquidity” chain, activated traditional macro factors that suppress gold, causing it to temporarily deviate from the safe-haven asset pricing logic. This does not mean the disappearance of gold’s safe-haven properties, but rather that, in the short term, the market may be more concerned with the “opportunity cost of holding gold in a high-interest-rate environment.”

However, industry insiders point out that the short-term adjustment in gold does not imply a weakening of the entire non-ferrous metals sector. The non-ferrous sector includes precious metals, base metals, and minor metals, each driven by different factors. While macro expectations suppress short-term sentiment, some varieties may show medium- to long-term support based on fundamental supply and demand.

1. Copper: Although short-term pressure from a strong dollar exists, in the medium to long term, copper, as a key metal for energy transition, may have strategic value under the “14th Five-Year Plan” guidance. Supply-side tightness expectations remain, while demand from power infrastructure and new energy vehicles is expected to continue growing.

2. Aluminum: Middle East geopolitics is reshaping the global aluminum market landscape. The actual closure of the Strait of Hormuz has caused severe supply disruptions, making aluminum the strongest performer among industrial metals in this cycle, approaching a four-year high.

3. Minor metals: China accounts for 90% of global rare earth smelting capacity and over 80% of tungsten supply. Minor metals are upgrading from industrial “vitamins” to strategic national resources. Against the backdrop of energy transition, high-end manufacturing, and geopolitical competition, their strategic attributes and supply-demand patterns are continuously improving, with significant revaluation potential for leading companies.

Looking ahead at the non-ferrous metals sector, Guosheng Securities believes that the combination of supply-demand mismatch, macro easing, and industrial upgrading will resonate, making the “non-ferrous feast” a long-term trend with high profitability sustained for 3-5 years. Huatai Securities recommends allocating 10%-20% of your fund portfolio to the non-ferrous metals sector, allowing you to share in the gains and diversify risk during market fluctuations.

On the market today (March 19), the non-ferrous ETF (159876), which covers industry leaders in gold, rare earths, copper, and aluminum, experienced a broad correction, with intraday prices dropping 4.2%, marking seven consecutive days of decline, falling back to early January levels. This may present an opportunity for funds optimistic about the sector’s future to position on dips.

In terms of constituent stocks, 60 stocks declined across the board, with Shanjin International down over 7%, Yongxing Materials and Chihong Zinc & Germanium down more than 6%, leading the declines and dragging the index lower.

【The non-ferrous sector is at the cusp—“super cycle” unstoppable】

The Huabao (159876) non-ferrous ETF and its associated funds (A: 017140, C: 017141) fully cover copper, aluminum, gold, rare earths, lithium, and other industries, including precious metals (hedging), strategic metals (growth), and industrial metals (recovery). This comprehensive coverage better captures the beta trend of the entire sector. Additionally, this ETF is a margin trading and short-selling target, making it an efficient tool for one-click exposure to the non-ferrous metals sector.

As of the end of February, Huabao (159876) had a latest scale of 2.427 billion yuan, with an average daily trading volume over 10 million yuan in the past month. Among the three ETFs tracking the same index, it ranks first in both size and liquidity.

Note: The previous on-market abbreviation for Huabao (159876) was “Non-ferrous Leader ETF.”

ETF fee-related notes: When investors subscribe or redeem fund shares, the agent may charge a commission of up to 0.5%. On-market trading fees are subject to the actual charges of the securities firm. The ETF does not charge sales service fees.

Associated fund fee notes: Huabao CSI Non-ferrous Metals ETF Initiated Fund (A class) has a subscription fee of 1,000 yuan per transaction for subscriptions of 2 million yuan or more, 0.6% for 1-2 million yuan, and 1% for less than 1 million yuan. Redemption fees are 1.5% if held less than 7 days, and 0% if held 7 days or more, with no sales service fee. Huabao CSI Non-ferrous Metals ETF Initiated Fund (C class) charges no subscription fee, with redemption fees of 1.5% for holdings under 7 days and 0% for 7 days or more; sales service fee is 0.3%.

Risk warning: Huabao non-ferrous ETF passively tracks the CSI Non-ferrous Metals Index, which was launched on December 31, 2013, and published on July 13, 2015. The index’s annual returns over the past five years are: 2021, 35.89%; 2022, -19.22%; 2023, -10.43%; 2024, 2.96%; 2025, 91.67%. The index components are adjusted periodically according to the index rules. Past performance does not predict future results. The constituent stocks shown are for illustration only; stock descriptions are not investment advice and do not reflect holdings or trading activity of any fund managed by the manager. The risk level of this fund is assessed as R3—medium risk, suitable for balanced (C3) and above investors. Suitability matching is subject to sales institutions’ judgment. All information in this article (including stocks, comments, forecasts, charts, indicators, theories, and any other forms) is for reference only. Investors are responsible for their own investment decisions. The views, analysis, and forecasts in this article do not constitute investment advice. Past performance is not indicative of future results. Fund investments involve risks; past performance does not guarantee future results. Please invest cautiously.