Hong Kong-listed gold stocks surged across the board, with China Gold International (02099) rising 8.54% to HKD 197.1, Lingbao Gold (03330) up 7.59% to HKD 20.98, Chifeng Jilong Gold Mining (06693) gaining 5.58% to HKD 34.84, Shandong Gold Mining (01787) advancing 5.43% to HKD 20.98, and Zijin Mining Group (02259) climbing 4.95% to HKD 122.9 as of press time.

Where the spark came from

The rally follows a sharp drop in international oil prices on Tuesday as US-Iran tensions eased, while US Treasury yields continued to decline. On August 4, US Treasury Secretary Scott Bessent stated that the US could reach a deal with Iran by August 5 to reopen the Strait of Hormuz. Qatar reported that parties are working to de-escalate the situation in the Middle East and have drafted wording for a potential agreement, though it stressed that no deal has been finalized yet.

Why the precious metals market is getting a lift

In addition to geopolitical developments, the US and Japan intervened in the yen exchange rate for the first time in 30 years, significantly strengthening the yen against the US dollar. A weakening dollar index has further supported the precious metals market. CITIC Securities believes that the current pullback in gold prices has nearly reached historic extremes, with the $4000-per-ounce level likely forming the bottom of the current cycle. Looking ahead, the brokerage expects that the impact of the Strait of Hormuz situation on gold prices will shift from a drag to a catalyst. With the Fed's monetary policy likely to be more optimistic than market expectations, and rising US military spending pushing up fiscal deficits, gold prices are expected to return to an upward trend within the year.