(Yicai) Aug. 5 -- Gold prices, which have already gained 20 percent since the start of the year, will continue to climb amid global asset price shocks, intensified geopolitical conflicts and expectations of a US interest rate cut, a Chinese futures brokerage told Yicai.

Interest rate cuts and geopolitical conflicts are supporting higher gold prices, Everbright Futures said. The price of gold on the COMEX in the New York Mercantile Exchange has surged 7 percent since July and 20 percent since Jan. 1.

Disappointing economic and employment data in the US is fueling expectations of an interest rate reduction in September, the Shanghai-based brokerage said. And this time the cut is likely to be bigger than before.

The US’ jobless rate hit 4.3 percent in July, more than the expected 4.1 percent, while non-farm payroll came in at the lowest since December 2020 at 114,000, far below the expected 175,000, according to the latest data released by the US Ministry of Labor. And the ISM manufacturing index, a gauge of factory activity, came in at 46.8 in July, below the anticipated 48.8.

Gold assets are ushering in an important sentiment inflection point, Liu Tingyu, fund manager of Maxwealth Fund’s Gold Stock Exchange Traded Fund, told Yicai.

However, the largest gold ETF holdings and the most active non-commercial net long positions in gold futures are far from historical highs, Liu said. Central banks around the world may continue to buy gold, which will support the gold price in the long run.

The situation was glum in global stock markets today. In the US, Nasdaq 100 futures slumped 6 percent and S&P 500 futures tumbled 3 percent after business tycoon Warren Buffett offloaded some most-weighted stocks including Apple and Bank of United States.

In the Asia-Pacific, the Nikkei 225 index plunged 12.4 percent to finish at 31,248.42 points, the Korea Composite Stock Price Index sank 8.77 percent, while the KOSDAQ index plummeted 11 percent. China’s Taiwan Capitalization Weighted Stock Index closed down 8.3 percent in its worst single-day performance ever.

Meanwhile, the Shanghai Composite Index dipped 1.54 percent to 2,860.7 points and Hong Kong’s Hang Seng Index slid 1.6 percent to 16,675 points.

COMEX gold futures [Gold Dec. 24] were trading down 0.3 percent at USD2,462.20 per ounce as of 6.30 a.m. Eastern Daylight Time.

Editor: Kim Taylor