Hedge funds’ bullish sentiments cannot conceal their short-term chill; public offerings significantly reduced their holdings of gold stocks in the second quarter
[Hedge funds’ bullish sentiments cannot conceal their short-term chill, and public offerings significantly reduced their holdings of gold stocks in the second quarter] The gold market, which suffered heavy losses in the second quarter and saw repeated ups and downs in July, has not yet emerged from the gloom, but Paulson, the “Wall Street sky god”, recently claimed that gold is in the early stages of a long-term bull market. Under the violent market fluctuations, the relevant holdings of public funds have become significantly differentiated, and a game surrounding short-term risks and long-term logic is being played out within the institution.
The gold market, which suffered heavy losses in the second quarter and saw repeated ups and downs in July, has yet to emerge from the gloom. However, Paulson, the "Wall Street sky god", recently claimed that gold is in the early stages of a long-term bull market. Under the violent market fluctuations, the relevant holdings of public funds have become significantly differentiated, and a game surrounding short-term risks and long-term logic is being played out within the institution. In the second quarter of 2026, the gold market experienced a violent storm. London gold spot prices continued to fall sharply after rising high, falling by more than 14% throughout the quarter. Among them, June became the month with the deepest decline, falling 11.69% in a single month, almost erasing the previous increase. After entering July, although the decline in gold prices has slowed down, it has not rebounded strongly, entering a range-bound pattern of "support when falling and pressure when rising". As of July 24, London gold prices had only increased slightly by 1.13% since July, closing at US$4,052.60 per ounce. Billionaire hedge fund manager John Paulson, known as the "Wall Street God", recently said that gold is currently in the early stages of a long-term bull market. He believes demand for gold as an alternative asset will continue to grow as people lose confidence in paper currency. "Gold is becoming the world's most important reserve currency, gradually replacing fiat currency, and the demand for physical gold from global central banks and the private sector continues to expand." Fidelity International's investment manager Ian Samson also recently recommended changing the gold allocation from "neutral" to "overweight," believing that the core logic supporting gold's long-term trend has not failed, and gold is expected to resume its bull market in 2027. Public funds significantly reduced their holdings of gold stocks in the second quarter. Data from Tianxiang Investment Consulting shows that Zijin Mining, Chifeng Gold, CICC Gold, Shanjin International, Shandong Gold, etc. are all among the top 50 public funds in the second quarter. Among them, more than 240 million shares of Zijin Mining were reduced by public offerings. The total market value of public funds held by public funds dropped from about 24.5 billion yuan in the first quarter to about 12.7 billion yuan. The number of heavily held public funds was almost halved. Chifeng Gold and Shanjin International also have 132 and 106 public funds respectively no longer holding heavy positions. Behind the reduction is fund managers' rethinking of short-term risk-return ratios and opportunity costs. Invesco Great Wall Strategy Select had heavy positions in Chifeng Gold and Zijin Mining in the first quarter, but in the second quarter these two stocks have all withdrawn from the top ten positions; Zhang Jing, the fund manager of this product, said that he is more concerned about the investment opportunities brought by the cost reduction of computing power and the release of scale. CCB Long-Term Value also removed all of its heavyweight gold stocks from the top ten in the first quarter. Although Yuan Feng, the multi-strategy fund manager of China Universal, believes that the non-ferrous sector may perform well in the future, he emphasizes that he pays more attention to non-ferrous metals related to AI. The gold stocks he added or increased his holdings in the first quarter are no longer among the heavy holdings in the second quarter. Even fund managers who still stick to the gold sector are becoming more cautious in their operations. Wang Ligang, who was selected by Yinhua Domestic Demand, had already taken significant profit cuts in the first quarter when market sentiment was high. In the second quarter, he continued to reduce his holdings in stocks such as Hunan Gold and Western Gold. Zhang Zhenqi, the fund manager of E Fund, said that as the geopolitical risk premium gradually subsides, gold is under short-term pressure on rising real interest rates, and its correlation with other assets has increased. Based on the consideration of overall risk budget management, the portfolio has gradually reduced its gold asset position. The market outlook is divided into disagreements Amid the wave of reductions in holdings, some fund managers have chosen to buck the trend. Invesco Great Wall Cycle Selection significantly increased its holdings of Zijin Mining and Chifeng Gold in the second quarter. Fund manager Zou Lihu believes that the valuation of the relevant targets has been significantly low. China-Europe Cycle Selection also increased its holdings in Zijin Mining, and added CICC Gold and Shanjin International to the top ten positions. Fund manager Ren Fei judged that gold, which was suppressed by liquidity in the early stage, may have liquidity margins to ease in the third quarter. The flow of funds also shows that the market is not fully bearish. Data shows that the total net inflow of seven gold ETFs last week was nearly 4.3 billion yuan, of which the gold ETF Huaan had a net inflow of 3.15 billion yuan in a single week, and the cumulative net inflow since July has exceeded 4.4 billion yuan. The World Gold Council pointed out that in the second half of the year, as gold prices stabilized, the scale of gold ETF outflows in the Chinese market has narrowed significantly.
For the market outlook, the market consensus has not yet formed. The World Gold Council stated that if there are no major changes in expectations such as the Federal Reserve raising interest rates once during the year, the world's major central banks tightening policies, and U.S. inflation peaking, gold prices may fluctuate around US$4,100 per ounce during the year; if the economic slowdown signal is strong enough, gold prices are expected to break through the current range; however, if the US dollar strengthens or interest rates rise more than expected, gold prices remaining below US$4,000 per ounce may trigger further selling. Institutional views are divided. Wang Hui of Boshi Fund believes that gold's mid- to long-term structural support is likely to remain unchanged; Shi Jing of Wells Fargo Fund said that gold is under short-term pressure; ICBC Credit Suisse Fund said that from the perspective of asset allocation and cost performance, gold may already have good allocation value at the current position and can be actively paid attention to; while HSBC and JPMorgan Chase have recently lowered their gold price forecasts.
For the market outlook, the market consensus has not yet formed. The World Gold Council stated that if there are no major changes in expectations such as the Federal Reserve raising interest rates once during the year, the world's major central banks tightening policies, and U.S. inflation peaking, gold prices may fluctuate around US$4,100 per ounce during the year; if the economic slowdown signal is strong enough, gold prices are expected to break through the current range; however, if the US dollar strengthens or interest rates rise more than expected, gold prices remaining below US$4,000 per ounce may trigger further selling. Institutional views are divided. Wang Hui of Boshi Fund believes that gold's mid- to long-term structural support is likely to remain unchanged; Shi Jing of Wells Fargo Fund said that gold is under short-term pressure; ICBC Credit Suisse Fund said that from the perspective of asset allocation and cost performance, gold may already have good allocation value at the current position and can be actively paid attention to; while HSBC and JPMorgan Chase have recently lowered their gold price forecasts.