Gold-related stocks on the Hong Kong market experienced a strong surge during the early trading session.

Zijin Gold International Resources Ltd saw its shares jump more than 13%, while Lingbao Gold Group Ltd rose over 12%. Chifeng Jilong Gold Mining Co Ltd gained more than 11%, Zhaojin Mining Industry Co Ltd advanced over 10%, and Zijin Mining Group Co Ltd increased by more than 9%.

This upward movement followed the release of US employment data on the evening of July 2nd. Figures from the Bureau of Labor Statistics showed the US economy added 57,000 non-farm payrolls in June. The labor market performance was weaker than anticipated, leading traders to fully price in an interest rate hike by the Federal Reserve for December. Previously, market expectations had pointed towards a potential hike in October.

Additional comments from Federal Reserve Governor Christopher Waller on Wednesday at a European Central Bank forum contributed to the sentiment. Waller noted that inflation risks had diminished, which further tempered speculation about additional rate increases within the year.

Analysis from CICC suggests that looking ahead to the second half of the year, a potential recalibration of expectations around three key narrative challenges could present a recovery opportunity for gold investment demand and market prices. The current gold market may have already fully priced in expectations for rate hikes, creating potential for a pullback in those expectations. Furthermore, following the recent unwinding of previously overweight positions, gold's value as a safe-haven asset could see a resurgence. While sales by Gulf central banks may be replenished, the medium to long-term supportive trend of global central bank gold purchases is expected to remain intact. The analysis points out that the current gold price may have excessively factored in expectations for interest rate increases.