In recent weeks, the price of gold has experienced a remarkable surge, reaching unprecedented heights on February 5. Both spot gold and COMEX gold futures hit all-time highs, prompting widespread interest in gold as an investmentBy February 6, the price remained elevated, with spot gold hovering around $2854 per ounce and COMEX gold futures at $2874 per ounce.

This soaring of gold prices has ignited interest in physical gold investments and gold accumulation, leading to a buoyant performance of gold-related financial products in the marketsNotably, after the recent holiday season, many banks are leveraging the excitement surrounding gold trading to promote various gold-themed financial products to their clients, seeing a boost in demand that aligns with the historical performance of these productsFinancial institutions are also gearing up their strategies in anticipation of increased interest from investors

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Although there hasn't been a significant increase in the number of new gold-oriented financial products being launched, existing ones are lifting their fundraising limits during their subscription periods.

Despite the current upswing in gold prices, financial experts urge cautionThey suggest that while prices may be high in the short term, considerable fluctuations could still lie ahead, emphasizing the importance for investors to clearly understand their financial goals and risk tolerance before diving in.

The price trajectory of gold has continued upward since the festive periodOn February 5, spot gold reached a zenith of $2882.39 per ounce, surpassing previous records, while COMEX futures crossed the $2900 thresholdAs of this report's preparation, spot gold remained significantly high at $2854 per ounce, with COMEX futures at $2874.

As gold prices soar, banks have been aggressively pushing gold-related financial products

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For example, Wang Yuan (a pseudonym) from Guangdong received a plethora of recommendations from various bank managers shortly after the holiday period, with approximately half of these pitches focused on gold investment products that boasted annualized returns exceeding 6% in a recent month.

For Wang, the decision to invest in gold seems strategic, given the declining deposit rates and increased volatility in stock marketsHe views gold investment as a balanced approach, providing a “safety net” through fixed-income assets while still allowing for the potential upside of gold investments.

In interviews with several financial institutions, it emerged that banks are primarily focusing on two types of gold-related financial products: the first combines fixed income with gold, ensuring stability; the second consists of structured products that are linked to gold prices

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These two product types respond differently to fluctuations in gold prices“Fixed income plus gold” products typically have around 80% invested in stable, income-generating assets, with a smaller portion allocated to gold, thus controlling riskIn contrast, structured products linked to gold may contain derivatives that correlate more closely with gold price movements.

One client manager, Ding Ding (a pseudonym), has been recommending structured gold-linked financial products to clients, driven by her belief in the long-term bullish outlook on gold pricesShe finds that the historical performance of these products, combined with current market enthusiasm, makes it easier for clients to buy into them.

Indeed, data shows that as gold prices rise, the annualized returns of these financial products are also trending upwardsAccording to Puyi Standards, until October 2024, gold-linked products have reported an average annual return of 3.7475%, indicating a noteworthy uptick from previous periods

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Notably, several gold-related products have performed handsomely recently, with some—like a strategy-driven fixed-income product managed by Everbright—which increased its annualized return from 3.68% to 5.29% within a short spanSimilarly, another structured product from China Merchants Bank recorded a rise in its annualized return to 6.27% over the last month.

As the gold trading frenzy intensifies, some institutions are also revising their strategies, attempting to reposition their product lines for the new yearHowever, despite the market enthusiasm, the issuance of new gold-themed financial products remains cautiousAccording to reports, only 85 products labeled as “gold” have been found in the market, with 38 currently categorized as “pending sale.” The issuance rate has not shown significant growth compared to the last quarter.

A representative from a financial institution explained that the current restrained issuance might stem from logistical delays associated with product design, approval, and launch processes, particularly following the recent holiday season

Institutions must also consider the sustainability of the current gold surge and whether their products will remain competitive moving forward.

While the issuance of new products may appear sluggish, existing gold-themed products are indeed increasing their upper limits on fundraisingFor instance, China Merchants recently raised the fundraising ceiling for one of its structured gold investment products from 200 million yuan to 250 million yuan due to substantial client demandThis increase mirrors similar actions taken over the previous three months across other products.

As gold prices reach unprecedented highs, a pressing question emerges: is now a good time to consider investing in gold-related product offerings? In the short term, analysts note that U.Stariff policies and the Federal Reserve's interest rate changes may both significantly impact gold pricesYu Zhi, a researcher, highlights the heightened world trade risks linked to expected tariff hikes, nudging investment towards gold as a haven asset

Furthermore, with the Fed's positioning expected to influence interest rates more broadly, investor sentiment towards gold may shift accordingly.

Looking at the mid to long-term forecasts, opinions among institutions diverge regarding gold pricesSome analysts assert that factors like escalating geopolitical tensions, quantitative easing measures from the Fed, and increasing central bank gold purchases due to currency depreciation would likely sustain upward pressure on pricesCitigroup, for instance, revised its average gold price forecast for 2025 from $2800 to $2900 per ounce, citing geopolitical uncertainties as driving demand for goldConversely, some institutions remain cautious, predicting increased volatility in gold prices moving forward, particularly considering anticipated changes in U.Sfiscal policies and corresponding currency values.

While gold is often perceived as a stable value-retaining investment, its price is highly susceptible to fluctuations