From "high-yield speculation" to "ballast asset"? The net value of gold investment products recovers but faces an issuance "ice age"

　　Source: China Business Journal

　　Reported by Zhang Manyou, Beijing Correspondent of China Business Journal

　　Gold price rebound is reviving the once neglected "fixed income + gold" wealth management products. According to data obtained by China Business Journal from Puyi Standard, the average returns for June and July were 1.65% and 1.34%, respectively, and as of August 21, the average return on gold wealth management had risen to 1.91%.

　　International gold prices began rebounding from an early August low of $4,041/oz, surging over 10% within the month to climb back above $4,600/oz. However, in contrast to the recovery in net asset value, the issuance side has continued to cool. According to China Business Journal’s research, there have been no new gold-themed investment products launched since June. Industry insiders believe gold’s role in investment portfolios is quietly shifting from a "return-seeking tool" to a "ballast stone to weather market cycles."

　　The yield curve for gold wealth management products has undergone a steep roller coaster ride in the past half year. According to Puyi Standard data, the average return on gold wealth management was 5.38% in February, with the highest return reaching 8.16% at that time; subsequently, returns dropped sharply, with average returns in March to May at 2.17%, 2.56%, and 2.32% respectively; average returns for June and July were 1.65% and 1.34%, and by August 21, average returns rebounded to 1.91%, with maximum returns hitting 4.60%.

　　In contrast to the uptick in returns, the product issuance side remains weak. Wind data shows that since 2026, a total of 34 new gold wealth management products have been launched, but none since June. Interviews revealed that currently, most wealth management companies use bond coupon income as the base, keep gold positions low, and flexibly allocate in dips within a multi-asset framework.

　　Qu Rui, Senior Deputy Director of Research and Development at Dongfang Jincheng, told reporters that the positioning shift from "chasing returns" to "ballast stone" means that gold was previously regarded as a tool to enhance trading performance in portfolios—increasing allocations for flexibility when prices rose, reducing positions during declines to control drawdowns, essentially rotating gold as a volatile alternative asset. However, since 2026, with concerns over US fiscal sustainability moving from expectations to data verification, persistent global central bank gold purchases, and progress on de-dollarization, gold is being re-priced as a strategic allocation. In scenarios of sovereign credit risk and tail-end inflation, gold provides hedging value—transforming its role in "fixed income +" portfolios from "return booster" to "risk diversifier."

　　But he also cautioned, "'ballast stone' does not equal 'stabilizer.' Gold’s own volatility is not low—it stabilizes against the fiat currency system, not against portfolio net value swings." Qu Rui pointed out that, of the recent 0.61% gain in one month and 0.75% over three months in net value, much was contributed by August’s rapid gold price rebound, rather than sustainable excess returns. From a risk pricing perspective, wealth management companies need to reassess gold position risk—even a 5%–10% allocation to gold can dominate short-term portfolio fluctuations in an environment where gold prices can swing 2%–4% in a single day.

　　Market institutions are generally optimistic about the future trend of gold prices.

　　The CIO Office of UBS Wealth Management released a statement suggesting the upward trend for the second half of the year is not over. As investors reassess US monetary policy and the outlook for the US dollar, gold prices have broken out of recent consolidation and risen again. Weaker US labor market data has reinforced market expectations that the Federal Reserve will likely maintain rates in the face of controllable inflation pressures. On the demand side, gold ETFs have seen renewed net inflows, driven initially by Chinese buying, with recent strengthening from European investors as well. Central bank gold purchases remain robust: World Gold Council data shows global central banks added a net 51 tons in June. In July, the People’s Bank of China increased gold reserves by 20 tons—the largest monthly increase since October 2023.

　　The UBS CIO Office also highlighted three conditions for gold’s continued rise: First, the US dollar must keep weakening. Their base case is that the Fed will hold rates steady in September, though it’s still uncertain whether rates will rise again this year. Second, market expectations for US real interest rates must decline. Real interest rates are adjusted for inflation expectations. For a non-yielding asset like gold, higher real rates mean greater opportunity costs. While the correlation between real rates and gold is not always stable, it remains an important indicator to watch. Third, investment demand for gold needs to keep improving. ETF inflows have picked up, but it remains to be seen if this trend can persist. Their model suggests that quarterly investment demand needs to reach about 500 tons to sustainably support gold prices at $5,000/oz or higher.

　　Yang Delong, Chief Economist at Qianhai Kaiyuan Fund, noted that de-dollarization is the general trend, and that an international gold price surpassing $5,000/oz is only a matter of time. He believes there are two main drivers of the current gold rally: first, US non-farm payroll and retail data missed expectations and inflation has cooled, boosting expectations for a Fed rate cut, with the likelihood of no move in September and a possible cut in December if data remains weak; second, the US Treasury is increasing bond buybacks, which has pulled back previously elevated Treasury yields, supporting gold prices. In addition, ongoing central bank buying globally continues to underpin gold’s long-term floor. According to the World Gold Council’s July 30 report, in the second quarter, global central banks and other official institutions added 289 tons of gold reserves, up 62% year-on-year. He recommends average investors allocate 10%–20% of their portfolio to gold assets to hedge against the long-term depreciation risk of the dollar and other paper currencies.

　　On the sustainability of wealth management companies’ "buying on dips" strategy, Qu Rui analyzed that its core depends on whether gold’s pricing center can rise steadily, not merely on timing skill. If weakening fiscal credibility and central bank purchases provide a long-term floor, buying on dips is an effective way to build positions at lower cost in an upward trend, and the long liability durations of wealth management firms provide space to withstand short-term volatility. Challenges exist, however: first, if a US inflation rebound forces the Fed to restart rate hikes or causes a temporary tightening of global liquidity, gold prices could correct sharply—meaning "buying on dips" might still leave room for even lower prices; second, with COMEX gold futures jumping to around $4,700/oz since August, short-term profit-taking pressure has increased, narrowing the window for dip buying and raising the risk of chasing the market at high levels.

　　(Editor: Yang Jingxin, Proofread: He Shasha, Checked: Zhai Jun)

Responsible Editor: Zhu Henan