SMM News: the United States election twists and turns, sharp fluctuations in the global financial market, gold prices out of a wave of first rise and then suppression of the market. In early November, the US election and the epidemic in Europe boosted risk aversion, with the dollar index falling to its lowest level in nearly two years, central banks in the US and Europe maintaining loose expectations, gold prices rose sharply and COMEX gold hit a new high of $1966 an ounce. However, in mid-November, the US election entered a seesaw battle, novel coronavirus vaccine progress news stimulated a rise in global market appetite, risk assets rose collectively, while safe-haven assets showed a downward trend, the dollar index bottomed out higher, gold prices fell back, COMEX gold lost 1900 US dollars / ounce, once fell to 1848 US dollars / ounce, the inner market Shanghai gold 2011contract also fell below the 400RMB / g mark.
New Progress in Vaccine Research and Development
Recently, the news of new progress in novel coronavirus vaccine research and development has affected the market. Pfizer said the novel coronavirus vaccine, developed in partnership with BioNTech, was 90 per cent effective in phase III trials. Boosted by novel coronavirus vaccine news, the market risk appetite rose, safe-haven assets were hit. However, as the market digested the vaccine news, the price of gold stabilized. Institutional positions show that institutions are pulling out of safe-haven assets. SPDR gold ETF positions have declined significantly for nearly a week, with a cumulative reduction of 26 tons to 1234 tons this week.
On the premise of confirming the effectiveness of the vaccine, the impact of the vaccine on the gold market is as follows: on the one hand, with the escalating epidemic situation in Europe and the United States, the key progress in vaccine research and development plays a key role in controlling the growth of new confirmed cases and promoting global economic recovery, and market expectations for the global economy will turn. The global economy will gradually recover with the release of consumer demand and residents' lives on the right track. On the other hand, market sentiment was boosted by news of key developments in vaccine research and development, with large categories of global assets entering a recalibration phase, with risky assets boosted and safe-haven assets somewhat under pressure in anticipation of an economic recovery.
Vaccines may not be available until early 2021, and vaccine storage is facing technical problems, while the arrival of winter has led to high outbreaks in Europe and the United States, so it is difficult for vaccines to have a substantial impact on the global economy in the short term. After digesting the vaccine-related news, the price of gold will be repaired.
The demand for short-term risk aversion is still strong.
Although several US media have reported that Biden has won more than 270 electoral votes, the final results of the election have not yet been announced, and US President Donald Trump has challenged the results in six states. The late US election may trigger the intervention of the Supreme Court, and the final result may be delayed for a long time, which is bound to bring volatility to the dollar and gold markets. In addition, the global number of novel coronavirus infection is increasing, the Synchronize epidemic in the United States and Europe has intensified, the US economic outlook remains uncertain, the Trump administration has withdrawn from the fiscal stimulus negotiations, the UK-EU negotiations are pending, and there are global geopolitical uncertainties. Overall, the epidemic, uncertainty about the future policies of central banks and the risks at the end of the US election have kept safe-haven demand strong, boosting the precious metals market.
Outlook for the future
Us election and vaccine news dominated market sentiment, and safe-haven assets stabilized after falling. The tail risk of the US election has not yet been released, while the epidemic in Europe and the United States has rebounded, and the demand for risk aversion is still strong. In the short term, treated as an oscillating market, the Shanghai Gold 2012 contract pays attention to the support effectiveness of the previous low of 390RMB / g. Before falling below the support line, you should not be overly bearish.
