Core Insights - Hong Kong is actively seeking new breakthroughs in the international financial system amidst changing global geopolitical dynamics, focusing on strengthening market ecology, promoting financial innovation, and integrating with the real economy [1][2][3] Group 1: Gold as a Strategic Asset - Gold is recognized globally as a safe-haven asset with dual attributes of a physical commodity and a financial investment, aligning well with Hong Kong's positioning as an international financial center [1][2] - The Chief Executive's 2024 Policy Address highlights the establishment of a commodity trading ecosystem centered around gold, aiming to expand the storage and delivery of physical gold in Hong Kong [1][2] Group 2: Market Demand and Growth Potential - Global demand for gold is expected to rise, with a projected 45% year-on-year increase in total gold demand by value, reaching $132 billion by Q2 2025 [3] - The demand for gold ETFs has remained strong for two consecutive quarters, with investment in gold bars and coins reaching the highest level since 2013 [3] Group 3: Infrastructure and Development Initiatives - The Hong Kong International Airport has increased its precious metal storage capacity by one-third to 200 metric tons, with plans to expand to 1,000 metric tons to support gold trading and logistics [4] - The Shanghai Gold Exchange will launch its international board designated warehouse in Hong Kong by June 2025, marking a significant step in internationalizing the gold market [4] Group 4: Strategic Positioning and Future Outlook - The growth potential of the gold market is becoming increasingly evident, with central banks adding 166 tons to their official gold reserves in Q2 2025, indicating a continued preference for gold as a stable asset [5] - Hong Kong aims to build a diversified and internationally connected ecosystem for gold trading, enhancing its role in the global economic landscape [6]

Core Viewpoint - The expectation of interest rate cuts by the Federal Reserve has renewed institutional interest in gold, leading Citigroup to revise its gold price forecast upward from $3,300 to $3,500 per ounce for the next three months [1][2]. Group 1: Citigroup's Revised Forecast - Citigroup has adjusted its gold price forecast, increasing the expected trading range from $3,100-$3,500 to $3,300-$3,600 per ounce [1]. - The bank's previous bearish outlook from June, which anticipated gold prices dropping below $3,000, has been overturned due to various economic factors [1][4]. - Factors such as weak U.S. labor data, concerns over the credibility of the Federal Reserve, and escalating geopolitical risks from the Russia-Ukraine conflict have supported the upward revision of gold expectations [2]. Group 2: Demand Dynamics - Since mid-2022, total gold demand has increased by over 33%, contributing to a near doubling of gold prices in Q2 of this year [3]. - Strong investment demand, ongoing purchases by central banks, and resilient jewelry demand are key drivers behind the rising gold prices [3]. - In Q2, global gold demand reached 1,249 tons, a 3% year-on-year increase, with significant contributions from gold ETFs and bar and coin investments [9]. Group 3: Economic Context - The U.S. economy is showing signs of weakness, with non-farm payroll data falling short of expectations, which has led to a surge in gold prices [6]. - The market is adjusting to the impacts of U.S. tariff policies and geopolitical tensions, with a shift in focus towards fiscal expansion and potential interest rate cuts by the Federal Reserve [6][10]. - The Federal Reserve's recent comments suggest a possibility of more than two rate cuts this year if labor market weakness persists without inflationary pressures [7]. Group 4: Central Bank Activity - Central banks continued to purchase gold, adding 166 tons in Q2, although the pace of accumulation has slowed [9]. - A survey indicated that 95% of central banks expect to increase their gold reserves in the next 12 months, reflecting ongoing confidence in gold as a strategic asset [9].

Group 1: Gold Market Overview - In Q2 2025, global gold demand reached 1249 tons, a 3% year-on-year increase, with a total value of $132 billion, marking a 45% increase and setting a new historical high [6][9] - The increase in demand was primarily driven by strong investment inflows, particularly in gold ETFs, which saw a net inflow of 170 tons in Q2, contrasting with outflows in the same period of the previous year [9][11] - Central banks continued to purchase gold, adding 166 tons in Q2 2025, although the pace of purchases has slowed [9][11] Group 2: Investment Trends - Gold prices surged by 26% in the first half of 2025, outperforming most major asset classes, which attracted significant capital into the gold market [6][9] - The demand for gold bars and coins increased by 11% to 307 tons, with Chinese investors leading the way, showing a 44% increase in demand [9][11] - The overall demand for gold ETFs in the first half of 2025 reached 397 tons, the highest level since 2020 [9][11] Group 3: Jewelry Demand - Global jewelry demand declined by 14% year-on-year in Q2 2025, nearing the lows of 2020, despite the total value of jewelry consumption rising to $36 billion [11][12] - In China, jewelry demand fell to 69 tons, a 20% year-on-year decrease, attributed to high gold prices and changing consumer preferences [11][12] - The number of jewelry retail outlets has decreased, further constraining consumer purchasing options and contributing to the decline in jewelry demand [11][12] Group 4: Future Outlook - The strong start to the year suggests that gold prices may experience fluctuations within a narrow range in the second half of 2025, with macroeconomic uncertainties providing support for gold [7][12] - The ongoing consolidation in the jewelry industry may suppress upstream demand but could lead to healthier market dynamics in the long term [12]