Is the gold price at its bottom? The "Golden Chess Game" behind the rebound

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Source: Caixin News

The key factors determining gold are divided into long-term and short-term. The long-term factors lie in the U.S. fiscal deficit rate and the level of government debt and credit it represents, while the short-term factors depend on the degree of monetary policy easing.

After touching a temporary low early this week, the international gold price has entered a period of consecutive rebounds. As of 2:00 p.m. Beijing time on March 25, 2026, London spot gold and COMEX gold futures have both held steady at 4,500 U.S. dollars per ounce.

Market sentiment has clearly improved. This rebound quickly transmitted to China’s domestic capital markets. According to data from Tonghuashun, on March 25 the precious metals sector in the A-share market stood out especially. In the morning session, the sector’s gain at one point exceeded 5.5%; afterward, the sector’s overall increase narrowed somewhat. As of the time of this release, the sector’s comprehensive rise still remained above 2.5%, bringing about RMB 1 billion in net inflows of main-force funds

Within the sector, individual stocks show a pattern of broad-based gains. Chifeng Gold (600988.SH) saw its intraday highest gain once rise to more than 9%, and other stocks such as Xiaocheng Technology (300139.SZ) and Zhongjin Gold (600489.SH) also performed actively. After a period of adjustment, it appears that capital is once again searching for certainty-style opportunities in the gold track.

Zijin Mining’s “gold chess game”

Behind this overall rebound in gold stocks, besides the impact of geopolitical factors, what draws the most attention is Zijin Mining’s (601899.SH) acquisition of Chifeng Gold. This M&A deal, which sparked intense attention in the capital markets, led to a sharp drop in the share prices of both companies on the day after the acquisition news was released. Market concerns mainly focus on acquisition premium, short-term financial pressure, and uncertainty regarding resource integration. However, once negative sentiment in the short term is gradually digested, the market begins to re-examine the transaction with a longer-term perspective.

Based on the companies’ recently disclosed 2025 annual reports, by the end of the reporting period, Zijin Mining’s consolidated gold resource quantity was as high as 4,610.48 tons, with gold reserves of 1,996.25 tons. For Chifeng Gold, its consolidated gold resource quantity was 583 tons. This acquisition allows Zijin Mining’s resource reserve and capacity figures to outline a blueprint with plenty of room for imagination. According to data on the 2025 global top ten gold mining companies disclosed by the Mining Committee of the China Association for Asian Economic Development, if Zijin Mining successfully consolidates and acquires Chifeng Gold, its annual production would be only behind U.S. Newmont (2025 production capacity: 5.89 million ounces), placing it among the world’s No. 2.

In recent years, this mining giant has been using gold as its cornerstone to accelerate expansion into multiple key mineral areas such as copper, lithium, and molybdenum, building an industrial system characterized by coordinated development across multiple categories. In its copper business, the Phase II expansion and reconstruction project of the Xizang Julong Copper Mine has been completed and put into operation, with annual copper production capacity of 300,000—350,000 tons, and it is actively advancing preliminary work for the Phase III project. In terms of lithium resources, its Argentina 3Q lithium salt lake, the Xizang Lajiuozuo lithium salt lake, and Hunan Xiangyuan lithium mine entered centralized production in 2025; the northeast portion project of the Manono lithium mine in the Democratic Republic of the Congo is planned to be completed and put into operation in June 2026. In the molybdenum segment, one of the single largest molybdenum mines globally by reserves that it controls—Anhui Shapinggou molybdenum mine—targets molybdenum production of 15,000 tons in 2026, and 25,000—35,000 tons in 2028.

Institution: U.S. rate cuts remain the overall trend, and gold’s long-term outlook stays optimistic

Zijin Mining’s diversified footprint is becoming even clearer, but the value of any mining company ultimately cannot be separated from the underlying backdrop of the macro environment. For gold, a special commodity with both commodity and currency attributes, its price fluctuations are even more closely tied to the complex international situation.

Ren Fei, fund manager at the China European Fund, told Caixin News that the determining factors for gold are divided into long-term and short-term. The long-term factors are the U.S. fiscal deficit rate and the level of government debt and credit it represents, while the short-term factors depend on how loose monetary policy is.

From this framework, it is not hard to understand why after the outbreak of geopolitical risk in the Iran-U.S. conflict, gold actually fell instead. In the short term, the Iran-U.S. conflict significantly boosted oil prices, causing inflation expectations—already tending to decline—to return. At the Fed’s FOMC meeting in March, it expressed a hawkish stance, worrying that the repeat of inflation could lead to expectations of rate hikes in 2026, which greatly restricts the room for monetary policy easing and directly pressures gold. Meanwhile, the United States tried to ease its own debt and credit crisis by strengthening control over resource countries. The military advantages displayed early in the conflict once boosted the U.S. dollar index, thereby challenging gold’s long-term pricing logic.

For gold’s long-term outlook, Ren Fei remains optimistic. He believes that the Iran-U.S. conflict has gradually fallen into a stalemate. The difficulty for the United States and its allies to fully subdue Iran is far beyond expectations. The final outcome may still revert to a pattern of fighting, stopping, and repeated negotiations. This would not only fail to demonstrate the U.S.’s past absolute hegemony, but would further accumulate debt in the process and consume its own credit. In addition, whether to relieve pressure on the government’s debt service payments or to support the construction of emerging industries such as AI, U.S. monetary policy is difficult to truly turn into sustained tightening; rate cuts remain the overall trend in the medium and long term.

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Responsible editor: Zhu Hunan