CICC Says Gold Bull Market Isn't Over, Recommends Overweight

In a research note, CICC said the two narratives that had been suppressing gold prices are being invalidated. First, global liquidity is not in a real tightening cycle. Falling US inflation and slowing growth tilt the economic backdrop toward easier monetary policy. Warsh, in CICC's view, is "hawkish in words but dovish in deeds," and Federal Reserve reform could open room for future rate cuts. Second, de-dollarization has not ended. Warsh's balance-sheet reduction is seen as potentially helpful for restoring dollar credibility, but the policy faces heavy constraints from financial markets and politics, so the outlook for implementation is highly uncertain. At the same time, high debt, high deficits, and policy uncertainty may make the structural damage to the dollar's credibility difficult to reverse. The report also pointed to global central banks' net gold purchases rebounding to 289 tonnes in the second quarter, up 62% year over year and the highest for any second quarter on record, reflecting deep-rooted concerns about the dollar. Reserve diversification should keep supporting gold demand over the medium to long term. With ample liquidity and less upward pressure on real interest rates and the dollar, gold may regain support from dual drivers. CICC concluded the gold bull market is not finished, and the window for rebuilding positions after the earlier adjustment is open, recommending investors continue to overweight gold.