CMB Securities: Gold Enters Placement Window, Currently Overweighting Gold Has High Safety Margin

　　Source: Zhitong Finance

　　CITIC Securities published a research report stating that gold is entering an allocation window. From the Federal Reserve's monetary policy outlook, Trump declared that "the next Fed Chair might operate from the White House." The bank expects that future statements by Waller on monetary policy will be more dovish than market expectations, which, while weakening the Fed's hawkish outlook, also raises the risk of the US entering a stagflation cycle. After the Federal Reserve’s March meeting, international gold prices pulled back, and currently a heavy allocation to gold offers a high margin of safety.

　　CITIC Securities’ main viewpoints are as follows:

　　Looking back at gold price performance after past energy shocks, the rapid surge in energy prices such as crude oil often leads to heightened market expectations for the Federal Reserve's tightening monetary policy, so gold prices do not necessarily benefit simultaneously and may even experience short-term pressure; at the end of February 2026, the US and Israel launched an offensive, carrying out airstrikes on Iran. Since the beginning of the Iran crisis, the WTI crude oil price rose sharply from $67.02/barrel on February 27 to $96.57/barrel on April 10, an increase of 44.09%. During the same period, COMEX gold prices dropped from $5,278.3/oz to $4,746.9/oz, a decrease of 10.07%.

　　However, as the market gradually accepts the fact of a systemically higher energy price center, and further trades on long-term inflation stickiness, weakening monetary credit, and stagflation risk, gold’s properties as an inflation hedge and safe haven will regain dominance, and prices typically shift from being suppressed to strong.

　　During the first oil crisis of 1973-1975 and the second oil crisis of 1978-1980, gold prices increased by 173.1% and 167.8% respectively; Newmont's share price recorded a 27.34% drop and a 61.18% rise during the same periods, while the S&P 500 Index experienced a 29.4% fall and a 12.24% rise during these oil crises, with gold stocks outperforming the broader market. During the “quasi-stagflation” periods as defined by the bank—August 2007 to June 2008, and January 2022 to January 2023—the domestic precious metals index rose by 4.37% and 22.28% respectively, achieving excess returns compared to the benchmark index. Unlike other periods, during the energy shock from 1990-1991, when gold was still in its long-term downward phase from 1980-2001, the precious metals stock index did not outperform the broader market.

　　Energy prices are rising due to supply disruption expectations, US inflation stickiness will further strengthen, and meanwhile, actual consumer purchasing power and corporate profitability may weaken simultaneously. Meanwhile, the Federal Reserve's monetary policy remains “caught in a dilemma.” As of February in the 2026 fiscal year, the cumulative interest payments by the US Treasury reached $425 billion, with an average interest payment rate of 3.32%. If the Fed maintains high rates or further hikes to curb inflation, fiscal deficit pressures in the US will intensify further due to rising interest payments. In addition, with the midterm elections approaching, the US equity market has been weakened by ongoing conflicts. Trump has motive to pressure the new Fed Chair Waller to cut rates.

Editor: Zhu Henan