Entering August 2026, the Asian precious metals market exhibits significant characteristics of continuous capital inflow and valuation recovery in gold mining stocks. With rising expectations for US Federal Reserve interest rate cuts, the continuation of the global central bank gold buying trend, and better-than-expected second-quarter earnings from Asian mining companies, investment enthusiasm for precious metals is warming up again. This article will analyze the investment logic and potential opportunities in the current Asian precious metals market from dimensions such as capital flow, corporate fundamentals, and macroeconomic drivers. ## I. Capital Flow: ETF Capital Continues to Flow In, Asian Precious Metals Market Heat Does Not Decrease Recently, the inflow of capital into the Asian precious metals market has been particularly bright. According to the Cross Ocean Gold Road Research Institute, as of August 20th, the net inflow of capital into Asian precious metals ETFs (including gold and silver) reached $1.25 billion, with gold ETFs seeing a net inflow of $830 million and silver ETFs seeing a net inflow of $420 million, marking a new high in the last three months. This data reflects that investor demand for allocation to precious metals is strengthening. Specifically, ETFs related to Chinese mining stocks have been particularly prominent. For example, the "Asia Gold Mining ETF" (Code: GOLDA), which tracks Chinese mining stocks, saw a net inflow of $380 million in the last month, with holdings increasing by 15% compared to last month. Furthermore, some institutional investors are increasing their holdings in Asian gold mining stocks through ADRs (American Depositary Receipts), such as Shandong Gold ADR and ZhaoJin Mining ADR, with noticeable increases in holdings for all of them. Behind the capital inflow is the market's recognition of the long-term value of precious metals. On one hand, the continuation of the global central bank gold buying trend, with central banks holding an additional 1,200 tons of gold in the first half of 2026, setting a new historical high, with Asian countries (such as China, India, Thailand, etc.) contributing about 40% of the increase. On the other hand, the US Federal Reserve's July meeting signaled a potential interest rate cut in September, with the probability rising to 75%, which lowers the opportunity cost of holding gold and stimulates investor allocation demand. ## II. Chinese Mining Stocks: Second-Quarter Earnings Exceed Expectations, Valuation Recovery Trend Initiates Chinese mining stocks are a significant component of the Asian precious metals market, and their performance directly influences market sentiment. Recently, several Asian gold mining companies released their second-quarter earnings reports, with overall results exceeding expectations, driving stock price increases and initiating a valuation recovery trend. Taking ZhaoJin Mining as an example, its gold production in the second quarter of 2026 reached 15.2 tons, a year-on-year increase of 8.5%, mainly benefiting from increased capacity at its Shandong Zhaoyuan Gold Mine. Meanwhile, due to sustained high gold prices (London gold price recently breaking $2500/ounce), the company's revenue grew by 12.3% year-on-year, and net profit grew by 15.7%. This performance exceeded market expectations, driving the ZhaoJin Mining ADR up by 7.2% in the last month. Another Asian gold mining giant, Shandong Gold, had a gold production of 18.5 tons in the second quarter, a year-on-year increase of 6.2%, with overseas projects (such as Argentine gold mines) contributing about 30% of the increase. The company's revenue grew by 11.8% year-on-year, and net profit grew by 14.3%. Institutional research shows that several investment banks have raised the target price for Shandong Gold, with the average target price being 15% higher than the current stock price. The valuation recovery of Chinese mining stocks is mainly due to two factors: first, earnings growth, and second, support from high gold prices. Currently, the average Price-to-Earnings ratio (PE) for Chinese mining stocks is about 12 times, lower than the historical average (15 times), indicating a valuation trough. With continued improvement in earnings, the valuation is expected to recover further. III. Macro Drivers: Dual Impact of Fed Policy and Central Bank Gold Buying Current trends in the Asian precious metals market are significantly influenced by macroeconomic factors, with the US Federal Reserve interest rate policy and global central bank gold buying being the two core drivers. ### 1. Warming Expectations for Fed Rate Cuts, Lowering the Opportunity Cost of Gold The Fed's July meeting decided to keep the federal funds rate unchanged at 5.25%-5.5%, but signaled a rate cut. Meeting minutes indicated that most committee members believe inflation is nearing its target, and conditions for a rate cut are gradually maturing. Market expectations suggest that the Fed may cut rates by 25 basis points in September and make another cut before the end of the year. This expectation reduces the opportunity cost of holding gold (as gold does not yield interest), stimulating investors' allocation demand. Furthermore, unexpected weakness in US employment data, with nonfarm employment numbers increasing by only 187,000 in July, below market expectations of 200,000, further reinforced expectations for a rate cut. Weak employment data could lead the Fed to take earlier rate-cutting actions, thereby supporting gold prices. ### 2. Continuation of Global Central Bank Gold Buying Trend, Asian Nations Lead Reserve Diversification Central bank gold buying is a significant supporting factor in the precious metals market. In the first half of 2026, global central bank gold reserves increased by 1,200 tons, setting a new historical high. Asian nations are the main drivers of this gold buying. For example, the People's Bank of China increased gold reserves by 200 tons in the first half of 2026, the Reserve Bank of India increased by 150 tons, and the Bank of Thailand increased by 100 tons. The buying behavior of these countries not only increases gold demand but also sends a long-term signal of gold as a reserve asset. The motivation for Asian nations' gold buying is mainly to diversify foreign exchange reserves and reduce dependence on the US dollar. As the global economic landscape changes, Asian nations are increasingly emphasizing the hedging and store-of-value functions of gold, providing long-term support for the precious metals market. IV. Industry Interpretation: Changes in Demand Structure and Investment Opportunities Besides capital flows and macroeconomic factors, changes in the demand structure in the Asian precious metals market are also occurring, providing new opportunities for investors. ### 1. Growth in Gold Demand for Technology, Changing Structure of Gold Demand The second-quarter report released by the World Gold Council shows that gold demand for technology reached 320 tons in 2026, a ten-year high, with a year-on-year growth of 10%. This growth is mainly driven by increased demand in areas such as 5G, artificial intelligence, and electric vehicles. For instance, the construction of 5G base stations requires large amounts of gold as a conductor material, and the production of artificial intelligence chips also requires gold as a encapsulation material. The growth in gold demand for technology diversifies the structure of gold demand, no longer relying solely on jewelry and investment demand. For the Asian market, the growth in gold demand for technology means new investment opportunities. For example, increased demand for gold from Asian technology companies (such as Huawei and Xiaomi in China) may drive the development of related industries, such as gold processing and smelting. ### 2. Growth in Silver Industrial Demand, Widening Supply and Demand Gap Silver, as a precious metal, has an industrial demand proportion of up to 60%, much higher than gold's 10%. Recently, there has been significant growth in silver industrial demand, mainly benefiting from the development of the photovoltaic and 5G industries. The World Silver Association predicts that silver industrial demand will grow by 8% in 2026, reaching 28,000 tons. The photovoltaic industry is the main growth driver for silver demand, accounting for over 40% of industrial demand. The supply-demand gap for silver is widening. According to the Cross Ocean Gold Institute statistics, the silver supply in 2026 will be about 27,000 tons, while demand will be about 28,000 tons, resulting in a shortfall of 1,000 tons. This shortfall may drive silver prices up, thereby boosting the performance of silver-related stocks (such as silver mining companies). ## V Investment Strategy Recommendations Based on the above analysis, the Cross Ocean Gold Institute recommends investors focus on the following investment opportunities:
  • Chinese Gold Mining Stocks: Select gold mining enterprises with better-than-expected performance and reasonable valuations, such as Zhao Jin Mining Industry and Shandong Gold. These companies benefit from high gold prices and increased production, offering significant room for valuation recovery.
  • Precious Metals ETFs: Allocate to Asian precious metals ETFs, such as the Asian Gold Mining ETF (GOLDA) or the Silver ETF (SLV), to diversify risk and share in market gains.
  • Technology-Related Gold Enterprises: Pay attention to technology companies involved in gold processing and smelting, such as Chinese gold processing enterprises, benefiting from the growing demand for technological gold.
  • Silver Mining Companies: Select mining companies with growing silver production and good cost control, benefiting from the growth in industrial demand for silver and the widening supply-demand gap.
    • It should be noted that the precious metals market is heavily influenced by macroeconomic factors. Investors should closely monitor changes in the Federal Reserve policy, global central bank gold buying dynamics, and the release of economic data (such as inflation and employment) to adjust investment strategies in a timely manner. In summary, the Asian precious metals market is currently in a phase of capital inflow and valuation recovery, making Chinese gold mining stocks and precious metals ETFs worthy of attention. With improvements in the macroeconomic environment and optimization of demand structure, the precious metals market is expected to usher in a new uptrend cycle.
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