[Gold and silver regroup precious metals sector “comeback”] Industry insiders said that the recovery of this round of precious metals sector is mainly due to the cooling of the US economy and the job market to push up the Federal Reserve’s interest rate cut expectations within the year. Looking ahead to the future market, the Federal Reserve’s monetary policy adjustment and risk aversion are still the key factors determining the trend of precious metals.
After nearly two months of adjustment, gold and silver began to regroup. On July 8, as of 17:00 Beijing time, London gold (spot gold) rose to the highest level in more than 1 month, and London silver (spot silver) rose more than 7% since the stage low; Futures market, A-share market precious metal plate performance is also bright.
Industry insiders said that the recovery of the precious metal sector this round is mainly due to the cooling of the US economy and the job market, which has pushed up the Federal Reserve’s interest rate cut expectations within the year. Looking ahead to the future market, the Federal Reserve’s monetary policy adjustment and risk aversion are still the key factors determining the trend of precious metals.
The precious metals sector recovered modestly
Recently, the gold and silver markets have shown a long-lost warmth. By late yesterday, London gold had risen to its highest intraday level in more than a month, while London silver had risen more than 7 per cent since its June 27 trough.
Futures markets are not far behind. Since June 27, COMEX gold and silver futures prices have risen by more than 3% and 7% respectively; The main contract of domestic Shanghai gold and Shanghai silver futures has risen by more than 3% and 7% respectively since June 28.
A-share market related sectors are not inferior. On July 8, the precious metals sector led the rise, Shenwan secondary market precious metals sector opened all the way higher on the same day, the end of the increase narrowed, and finally closed up 0.36%; Looking at the extended time period, the plate recorded three consecutive rises, and the cumulative increase of 7.01% in 3 trading days.
In this round of rebound, the silver rally is obviously dominant. In this regard, the respondents believe that there are two main factors: first, silver due to low value, more speculative, historical volatility is much higher than gold, but also affected by non-ferrous metal crowding phenomenon; Second, silver has industrial attributes, and under the expectation of global manufacturing recovery, the silver price has greater upward elasticity under the reality of low supply elasticity and low inventory.
Markets trade Fed rate cut expectations
Different from the previous rising logic, the trading logic of the recovery of the precious metals sector in this round turns to the game of the Fed’s interest rate cut expectations.
“The recent synchronised recovery of precious metals prices is mainly affected by weaker overseas economic data.” Zheng Hong, senior analyst of macro and precious metals at Zheshang Futures Research Center, said that on the one hand, the U.S. manufacturing PMI weakened for the fourth consecutive month in June to below the line of growth and contraction, and was lower than market expectations; On the other hand, the U.S. unemployment rate rose further in June and the non-farm data of the previous two months were significantly revised down, indicating a substantial weakening of the U.S. employment situation.
Xia Yingying, nonferrous analyst of South China Futures, said that the cooling of the US economy and job market pushed up the expectation of the Federal Reserve to cut interest rates within the year is the main reason for the rally in precious metals, accompanied by the decline of the US index and short-end US bond yields during the period.
However, Caitong asset management reminded that although gold has a natural hedging and defensive attribute, the allocation value exists for a long time, but from the perspective of short cycle, the volatility of gold price can not be ignored.
Who is the “mysterious force” that will influence the future trend?
Looking forward to the future market, how will gold and silver trend? Who will be the “mysterious force” that will influence the trend?
At present, the Federal Reserve’s monetary policy adjustment and risk aversion are still the key factors determining the trend of precious metals. “Safe-haven demand will continue to support gold in phases, while investment asset allocation needs to anchor the Fed’s monetary policy margin.” Xia Yingying said.
Zheng Hong expects that gold and silver will rise in shock this year. On the one hand, with the gradual weakening of the US economic data, the Federal Reserve’s interest rate cut path is gradually clear, and the decline of the US Treasury interest rate is expected to drive up the investment demand for precious metals; On the other hand, the US election has not yet settled, geopolitical risks are still unresolved, and the demand for precious metals as a safe haven will remain high.
In addition, the central bank’s “gold buying fever” is still an important force that cannot be ignored to support gold prices. According to the World Gold Council’s 2024 Central Bank Gold Reserves Survey, 81 percent of the central banks surveyed said that global central bank gold holdings will increase over the next 12 months, compared to 71 percent last year.
“The increase in gold reserves is a strategic move by many central banks around the world and has a certain sustainability.” Xia Yingying said, “The central bank’s purchase of gold has become the second largest gold demand after jewelry, forming an important support for gold prices, and changing the traditional anchoring model of U.S. Treasury real interest rates.” In a complicated world situation, central bank buying will continue to support gold prices.”
