As the gold price fluctuates, it poses challenges for industry manufacturers. Companies like Lao Feng Xiang (600612.SH) and Zhou Dasheng (002867.SZ) have stated that they will adopt price control measures to offset fluctuations in gold prices. Recently, the gold price has entered a volatile phase. In mid-September, the domestic gold price exceeded 470 yuan/gram, and the international gold price broke through $1,940/ounce, leading to increased investment. However, starting from September 25th, the international gold price began a nine-day decline, reaching a seven-month low. This week, the market reversed again and the gold price rapidly rose, possibly influenced by the international situation. The volatility of the market first affects the terminal consumer market, as the short-term fluctuations in gold prices may suppress demand and lead to consumer hesitation. Manufacturers also face pressure due to the difference in gold prices, especially those who have stockpiled gold. The fluctuating gold price is a severe challenge for manufacturers as it increases uncertainty in profit acquisition and affects consumer purchasing decisions, thus impacting the sales of gold products. Gold retailers and wholesalers are implementing measures to hedge against losses caused by gold price fluctuations. Small gold retailers bear more risks in this situation. It is worth noting that UBS recently lowered its gold price forecast for the end of this year to $1,850 per ounce (previously $1,950 per ounce) and for June 2024 to $1,950 per ounce (previously $2,100 per ounce). Looking ahead, considering that the US dollar interest rate will remain at a high level for the foreseeable future, international gold prices will be suppressed. However, due to the pressure that the current high US dollar interest rate brings to the global economy, it is unsustainable and it is expected that the US economy will experience a hard landing in 2025, which means that the US dollar interest rate may begin to decrease by the end of 2024 or in 2025. Therefore, there is a possibility that international gold prices will continue to rise in the second half of next year or in 2025.
The gold price experiences roller-coaster-like fluctuations, prompting industry professionals to liken the market to gambling. How can gold brands hedge against risks?
