China International Capital Co says the two narratives that had pressured gold
are unraveling: global liquidity is not in a sustained tightening cycle and
de-dollarization remains active. US disinflation and slower growth support a
move toward easier policy, while Fed rhetoric looks hawkish but policy actions
are effectively dovish; Fed reform could open space for future rate cuts. Dollar
balance-sheet reduction would help restore dollar credibility in principle but
faces heavy market and political constraints, and structural erosion of dollar
Credit from high debt, deficits and policy uncertainty is hard to reverse.
Global central bank net gold purchases rebounded to 289 tonnes in Q2, up 62% YoY
and a Q2 record, signaling entrenched dollar concerns and continued
reserve-diversification demand for gold. With looser global liquidity reducing
upward pressure on real rates and the dollar, gold should regain support from
both liquidity and reserve diversification. The firm judges the gold bull market
is intact, the reallocation window after the recent correction is open, and
recommends maintaining an overweight in gold.
