CITIC Securities: ETF and Central Bank Buying Provide Floor Support, Gold Price Bottom May Be Elevated
nashnova research
CITIC Securities argues that ETF inflows and central-bank purchases have largely offset futures selling pressure, lifting gold's floor from $4,000 in June to the $4,100–4,200 range — and gold equities may rebound first.
Why did gold drop nearly $600 in September?
Spot gold fell from ~$4,700/oz in late August to ~$4,100/oz by end-September — roughly a 13% decline.
The core selling came from futures: COMEX net-long positions shrank by ~85 tonnes. This means → speculative money was liquidating at scale.
The trigger was a sharp rise in U.S. Treasury yields — the 10-year moved from 4.75% to 5.29%. In plain terms = the "opportunity cost" of holding gold jumped, so capital rotated into interest-bearing Treasuries.
Why yields surged: the U.S.-Iran conflict kept oil prices elevated, stoking inflation fears, while fiscal-expansion expectations pushed up the term premium (the extra return investors demand for holding long-dated bonds).
Why are ETF and central-bank flows called "above expectations"?
Global gold-ETF holdings rose a net 67 tonnes in September — below August's 120-tonne gain, but inflows were spread evenly across North America, Europe, and Asia. This means → it was not one region "bottom-fishing" but broad-based allocation demand.
Central-bank buying was even stronger: the PBOC added ~23 tonnes (740,000 oz) in September, up 90,000 oz month-on-month — a new single-month high for this buying cycle.
Since gold dipped below $5,000 in March, the PBOC's monthly purchases have risen from 160,000 oz to 740,000 oz. In plain terms = the lower gold went, the more the central bank bought.
CITIC concludes these two flows "substantially offset" futures selling, lifting the price floor from ~$4,000 in June to the current $4,100–4,200 range.
Real yields rose — why is gold demand still holding up?
The 10-year real yield climbed from 2.44% in late August to 2.93% by end-September — conventionally negative for gold.
Yet medium-term inflation expectations are also rising: in October the IMF revised its U.S. 2027 CPI forecast from 2.4% to 2.8%. This reflects the U.S.-Iran conflict and elevated oil prices re-pricing the market's medium-term inflation outlook.
U.S. September non-farm payrolls came in at just 29,000 — far below the 90,000 consensus — and the prior month was revised down from 162,000 to 133,000. In plain terms = employment data this weak makes it hard for markets to bet on further rate increases.
Higher inflation expectations + soft jobs data → real rates are unlikely to keep climbing, which keeps gold investment demand supported.
Where does gold-equity valuation stand now?
CITIC estimates that at the June trough price of $4,000, the gold-equity sector's P/E bottomed at ~15×.
At $4,200, sector P/E sits at 15× for 2026 and 12× for 2027. This means → valuations are back at the prior cycle's floor, with limited further downside.
Historical parallel: during July's price-bottoming phase, the CITIC Gold Index had already rebounded over 20% from its low. In plain terms = gold stocks have historically led the metal; if the price floor holds, the sector may already be moving.
What is the key thing to watch next?
CITIC notes that if U.S.-Iran tensions ease before the U.S. midterm elections, improved oil-price expectations could open a window for tightening fears to moderate.
Should Treasury-yield momentum slow, reduced futures selling + continued ETF inflows → further room for gold-price recovery.
The bottom line: whether gold truly stabilizes in the $4,100–4,200 range is the critical signal for a gold-equity rebound.
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