On February 11, the world of gold stocks saw a notable rally, capturing the attention of investors across global marketsIn particular, Hong Kong stocks, such as Lingbao Gold (03330.HK) and Zijin Mining (02899.HK), experienced a solid increase, rising by approximately 3.53% and 1.98% respectivelyThis trend wasn't isolated to Hong Kong; the mainland A-share market echoed these gains, with several gold stocks showing a vigorous performanceExamples include Zijin Mining (601899.SH), which climbed 2.43%, and Chifeng Jilong Gold Mining (600988.SH) with an increase of 2.22%. Other notable players like Hunan Gold (002155.SZ) and Western Gold (601069.SH) reported increases of 1.31% and 1%, respectivelyThe benchmark was further bolstered by the overall rise in gold prices which had been making headlines recently.

As analysts pointed out, the collective uptrend in gold stocks was intrinsically linked to the surging prices of gold itselfOver recent weeks, gold has undergone significant growth, consistently marking new historic highs attributed to a myriad of influencing factorsFor instance, on February 10, the COMEX gold futures market saw prices surpass the $2,900 per ounce threshold, closing at $2,936.8 per ounce, marking a day-on-day increase of around 1.7%. Since the dawn of 2025, the price of gold has surged over 11%. February 11 saw COMEX gold futures strengthen once again, touching an intraday high of $2,968.5 per ounce, tantalizingly close to the coveted $3,000 mark.

Domestically in Chinese markets, gold prices also reflected this upward trajectoryBy the end of the trading day on February 11, key contracts on the Shanghai Gold Exchange reached a peak of 693.2 yuan per gram, establishing a new recordRetail market trends confirmed this rise as well, with leading brands like Chow Tai Fook witnessing a significant increase in quoted prices for their gold jewelry, now often exceeding 870 yuan per gram, a notable hike of over 70 yuan since the start of the year.

The motivations behind this remarkable climb in gold prices deserve closer examination

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Analysts highlighted that recent spikes in gold valuations were largely driven by safe-haven demand, especially in light of escalating uncertainties related to U.S. presidential policiesOn February 10, it was announced that a new 25% tariff would be imposed on all steel and aluminum imports into the United StatesFurthermore, the U.SPresident indicated plans to unveil large-scale retaliatory tariffs on goods from other countries, mirroring the tariffs those nations impose on U.S. imports, scheduled for announcement on February 11 or 12.

Such concerns about new tariffs have exacerbated fears of heightened trade friction and inflation within the markets, consequently fueling safe-haven sentiments among investorsGold has historically served as a trusted hedge against inflation and economic uncertainty, driving a corresponding increase in demand which consequently pushes prices higherSupport for gold prices was further nourished by interventions from central banks around the globeStatistics from the World Gold Council reveal that in 2024, central bank purchases of gold reached a total of 1,045 tons, which represents a year-on-year increase of 1%. Specifically, in the fourth quarter of 2024, central banks ramped up their gold purchases considerably, totaling 333 tons, reflecting a dramatic increase of 54% year-over-year.

Moreover, recent data from the People's Bank of China illustrated a steady increase in the nation’s gold reserves, which reached 73.45 million ounces by the end of January, up from 73.29 million ounces at the close of DecemberThis marks the third consecutive month of increased holdingsAnother factor contributing to the bullish sentiment in the gold market is the announcement from the Chinese financial regulatory authority allowing ten pilot insurance firms to embark on gold investment ventures aimed at mid- to long-term asset allocationEstimates suggest this could inject approximately 200 billion yuan into the gold market, potentially altering its dynamics significantly.

Investment analysis from Huatai Securities further projects that the short-term drivers of gold price increases through 2025 will likely stem from the ramifications of changes in U.S. tariff policies, alongside the overall economic uncertainties in global markets

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