Market participants believe that in the medium to long term, the gradual economic recovery in the future has basically become a consensus, and it is expected that gold and silver will rise further before breaking through in the environment of "weak US dollar and low interest rates" in 2021.
Gold and silver prices have rebounded all the way since last week. On Monday, the international gold price returned to the $1900 / oz mark, and the silver price reached the $27 / oz level at one point. On Monday, the futures price of Shanghai gold also surged to 400 yuan / g again after a month, with Shanghai Silver recording as high as 5805 yuan / kg, a new three-month high.
In the face of the rebound in the gold and silver market in recent days, Shi Jialiang, an analyst at Fangzheng medium-term Futures Foreign Exchange and Precious Metals, told Futures Daily that the reason lies in the following three points: first, the overseas novel coronavirus epidemic worsened again, with the emergence of a new strain of novel coronavirus in the UK, which is 70% more contagious than ordinary novel coronavirus. London urgently closed the city, and many countries announced a ban on British flights, leading to the spread of market panic. Second, the US Congress has reached an agreement on the US $900 billion novel coronavirus rescue bill to provide funds for the government and provide long-term novel coronavirus assistance. The passage and implementation of the anti-epidemic relief plan will continue to release liquidity, and inflation expectations will push up gold and silver. Finally, the Brexit negotiations are once again in trouble and geopolitical risks remain. Overall, risk aversion and anti-inflationary demand pushed gold and silver up sharply.
Wan Yijing, a precious metals analyst at Galaxy Futures, told reporters that since last week, on the one hand, the Federal Reserve's December interest rate meeting continued to send a loose signal that global monetary easing is difficult to withdraw in the short term; on the other hand, the US Congress has reached an agreement on the $900 billion novel coronavirus rescue bill, and expectations of a rebound in inflation are high, further promoting the rebound in gold and silver.
Specifically, the Fed's December meeting "boots landed". In addition to keeping the policy interest rate and the speed of its asset purchase program unchanged, the Fed provided additional guidance on its asset purchase program and raised its US economic forecast at this meeting. the overall loose position has been basically maintained, so that gold and silver prices have been further supported.
"at the same time, as significant progress has been made in the current negotiations between Democrats and Republicans on a new round of fiscal stimulus, the last round of subsidies is about to expire and the epidemic in the United States is still aggravating, and the urgency of the launch of fiscal stimulus has also increased. as a result, the fiscal stimulus such as the market is expected to hit the ground by the end of the year, and rising inflation expectations will push gold and silver higher." Xu Ying, a precious metals and foreign exchange analyst at the East Securities Derivatives Research Institute, explained.
In addition, in this rebound, we can see that the price of silver is significantly higher than that of gold. In this regard, Shi Jialiang believes that the main reasons are as follows: first, from the speculative point of view of gold and silver, silver is more speculative than gold; second, the market scale and liquidity of silver is smaller than that of gold, and its fluctuation range is also larger than that of gold; third, the price ratio of gold and silver is in a higher position, and the valuation of gold and silver deviates. Fourth, silver has a unique industrial attribute, which will be greatly affected by macroeconomic factors and supply and demand factors.
He said that under the influence of the above factors, when precious metals are in a rising market, silver will rise more than gold, and when it is in a falling market, silver will also fall more than gold. Recently, under the combined influence of risk aversion and inflation expectations, the mood has changed most significantly, superimposed speculative attributes, making silver rise more than gold.
Xu Ying also said that because silver prices are inherently more elastic than gold, silver rose even more after the upward trend of precious metals as a whole was determined. In addition, expectations of economic recovery and rising inflation expectations have also led to a collective rise in industrial products. Crude oil, non-ferrous metals and ferrous metals have all increased significantly in recent days, and the industrial nature of silver has emerged. During the period of inflation, especially the recovery of PPI, silver outperformed gold, and the price of gold and silver fell.
"although the epidemic has not yet been brought under control, vaccine promotion has begun to be put on the agenda. After the epidemic has been brought under control, expectations of continued recovery in the US economy have rebounded, and the continued easing of the Federal Reserve has raised inflation expectations in the future." Wan Yijing believes that the main driving force supporting the continued rise of precious metals in the future is rising inflation expectations, which is the fundamental reason why silver is stronger than gold. In addition, the recent rise in black and non-ferrous metal prices has also been strongly affected by inflation expectations.
Looking to the future, Xu Ying believes that in the medium to long term, the gradual economic recovery in the future will basically become a consensus, and it is expected that the pace of slow recovery will be slow in 2021. It is very difficult for the previous loose fiscal and monetary policy to withdraw quickly, and a loose environment will be maintained. This has created a favorable environment for gold and silver to have "weak US dollar and low interest rates." it is a high probability event that gold and silver rise further before the breakthrough.
She said that the impact of the intensification of short-term winter epidemics in Europe and the United States on economic data is not expected to be fully reflected until the first quarter, and that loose policies and deflationary pressures in the real economy are the two forces affecting the trend of gold and silver. In the medium to long term, there is inflationary pressure, and whether there is a tightening of Fed monetary policy is a potential risk point. The Fed is expected to have a high tolerance for inflation, real interest rates continue to be deeply negative, and the outlook for gold and silver prices is optimistic.
Wan Yijing also believes that in the medium to long term, if the epidemic is repaired and loose expectations are consistent with the current market judgment, the price of gold and silver still has the power to continue to rise. However, it should be noted that whether the Fed's easing policy and US stimulus policy will change as the economy repairs better than expected, which will be the final turning point of the medium-and long-term rise in gold and silver.
In the short term, Shi Jialiang believes that the phased targets of gold and silver have been reached, and the main purpose at this stage is to float and wait for new opportunities. "at present, there is still room for gold to rise again, at least the spread of the epidemic in Europe is not bad. Silver may have to consider the two dimensions of mood and risk aversion, but it is more likely to follow the rise of gold as a whole." He suggested that the core idea of gold is to buy bargains and hold the spring market around the Spring Festival in February, and it is unlikely that the short-term pressure level of US $1915 / oz will become a spring high. Although the position of silver in the outer disk is on the high side, the kinetic energy of doing more in the inner disk is stronger, so the risk of active short selling is greater. In terms of operational strategy, silver is waiting for a better opportunity to enter the market; gold is bought on a bargain, and the target above the short-term 2102 contract is 402 Mel 405 yuan / g; before 2 months, the target is 410 mi 420 yuan / g.
In the long run, he believes that the ultra-loose monetary policy in the United States will continue, and the global inflationary pressure will gradually rise. while ultra-low interest rates remain unchanged, real interest rates will continue to decline, and the weakening trend of the dollar index will remain unchanged. after falling below the 88 mark, gold, which is safe-haven and anti-inflationary, still has room to rise, and a short-term decline does not change the overall trend. He believes that gold will continue to set new record highs in 2021.
