Major A-share indices closed lower today (March 19), with the Shanghai Composite Index narrowly holding above the 4000-point level. The nonferrous metals sector led the decline. The Nonferrous Metals ETF (159876), which comprehensively covers industry leaders in gold, rare earths, copper, aluminum, and other nonferrous metals, consolidated along with the market, remaining underwater throughout the session. Its price closed down sharply by 5.88%, marking the seventh consecutive negative daily close and falling to levels last seen in early January this year. This may present an opportunity for funds optimistic about the sector's future performance to accumulate positions during the dip.
Regarding constituent stocks, all 60 stocks declined. Xingye Silver & Tin, Guocheng Mining, Chihong Zinc & Germanium, Yongxing Materials, and China Molybdenum fell more than 8%, leading the losses and dragging down the index performance.
On the news front, against the backdrop of escalating Middle East conflicts triggering a surge in oil prices, the Federal Reserve kept interest rates unchanged as expected. The dot plot indicated one potential rate cut within the year. However, spot gold prices fell counterintuitively. As of writing, spot gold broke below the $4800 per ounce mark, hitting a two-month low.
Why did international gold prices fall against expectations? The core logic is actually straightforward: Middle East conflicts intensify → Oil prices rise → Inflation expectations re-emerge → The Fed's room for interest rate cuts is constrained → Real interest rates remain elevated → The carrying cost of holding gold increases, and its relative attractiveness diminishes → Some capital chooses to exit. Fundamentally, gold pays no interest; when the real yield of other assets (such as U.S. Treasuries) increases, gold faces competitive pressure.
However, from a medium- to long-term perspective, several institutions remain optimistic about gold. Wells Fargo projects a year-end target price range of $6100 to $6300 per ounce, based on the structural support for gold prices: global central banks have been net buyers of gold for many consecutive years, the long-term credibility of the U.S. dollar is gradually eroding, and geopolitical risk premiums, while temporarily overshadowed by the narrative of rate cuts, have not truly disappeared.
Gold is currently caught in a tug-of-war between short-term and medium-to-long-term logic. In the short term, as long as oil prices remain high and expectations for rate cuts do not strengthen, gold prices face pressure. From a medium-to-long-term perspective, if the Middle East geopolitical situation shows signs of resolution, inflation data resumes a downward trend, or the Fed unexpectedly shifts to a more dovish stance in any given quarter, gold prices could rebound very rapidly.
CITIC Securities believes that once Middle East geopolitical events subside, gold is poised to reach new highs. Historical analysis shows that following past Middle East conflicts, the medium-term trend of gold prices has ultimately depended on U.S. dollar credibility and liquidity factors. Looking ahead in the current conflict, the continuation of two major trends—easy liquidity and weakening U.S. dollar credibility—is expected to continue driving gold prices higher. Historically, advantages in valuation or stock price percentiles have amplified the upside potential for the gold sector. Currently, the PE valuations of leading companies have retreated to historically low levels of 15-20x. Considering the high synchronization between recent stock price peaks and gold price peaks, there is optimism that new highs in gold prices will drive new highs in stock prices.
The Nonferrous Metals ETF Huabao (159876) and its feeder fund (Class A: 017140, Class C: 017141) track an index that comprehensively covers industries including copper, aluminum, gold, rare earths, and lithium, encompassing different cycles such as precious metals (hedging), strategic metals (growth), and industrial metals (recovery). This full-category coverage allows for better capture of the sector's overall beta movements. Furthermore, this ETF is a margin trading security, making it an efficient tool for gaining exposure to the nonferrous metals sector.
As of the end of February, the Nonferrous Metals ETF Huabao (159876) had a latest size of 2.427 billion yuan, with an average daily turnover exceeding 100 million yuan over the past month. Among the three ETF products tracking the same underlying index in the market, it ranks first in both size and liquidity.