PRECIOUS METALS | Daiwa Raises Gold Price Forecast Amid Middle East Tensions

Daiwa has revised its year-end gold price forecast, increasing it from 1,200 yuan per gram to 1,290 yuan, driven by heightened market expectations due to tensions in the Middle East. According to Jin10, the firm reaffirmed its 'buy' rating for Lao Feng Xiang (06181.HK), noting the company's recent price adjustment over the weekend, which saw product prices rise by an average of 29%, aligning with market expectations. The estimated average gross profit margin for its products in 2026 is projected to reach 39.4%. The price increase, ranging from 20% to 30%, marks the largest single adjustment by the company to date, with pure gold products experiencing a higher increase compared to diamond-studded items. Daiwa believes the company has effectively transferred cost pressures to its core gold products. Since Lao Feng Xiang's price adjustment last October, gold prices have risen approximately 26%. Despite the price hikes, the company's stores remained crowded during the Lunar New Year period. Daiwa maintains a positive outlook and earnings forecast for Lao Feng Xiang, reiterating its target price of 880 HKD.