Recently, gold and silver fell sharply again, with London spot gold falling below the $1700 / oz mark for the first time since March 31, and led to an 8 per cent drop in London spot silver at one point. Market participants said that gold and silver prices this week may repeatedly test the bottom of the strong support level, medium-and long-term shock downside is more likely.
On Friday, the number of non-farm payrolls in the United States in July exceeded market expectations, benefiting the dollar and pushing up US bond yields, while precious metals "dived". As of the close of trading last week, December gold futures on the New York Mercantile Exchange closed down 2.97%. The biggest weekly decline since June 18. Silver futures in September closed down 3.8%, the lowest since March 30. Gold and silver rebounded in early trading on Monday, and the decline narrowed somewhat.
Gu Jiannan, an analyst at Haitong Futures, told the Financial Associated Press that the non-farm payrolls data released last Friday slightly exceeded market expectations, triggering market expectations of a sharp rise in nominal interest rates in the United States, leading to a sharp adjustment in precious metal prices. there is strong support for the early low of $1670 / oz in short-term gold.
Galaxy futures researcher Wan Yijing also said that the Fed's reduction of QE steps is inevitable, so precious metal prices have always been under pressure. If the spread of the epidemic in a short period of time leads to a rebound in risk aversion, which brings support to precious metals, it may also be a short-term phenomenon. This week is expected to repeatedly test the lower strong support level is more likely, pay attention to the remarks of Fed officials, if the overall bias towards hawks, do not rule out the possibility of a downward breakthrough.
Citic Futures Research News pointed out that recently, the largest gold and silver ETF fund positions deviated. The net bulls of gold in the Commodity Futures Commission ((CFTC)) fell, while silver rebounded. CFTC positions suggest that expectations of debt reduction have led to a rise in short positions in gold, while bullish sentiment in silver has risen, requiring investors to keep a close eye on it.
Pay attention to the attitude of the Federal Reserve and the supply of US debt
Wang Yanqing, a futures researcher at CITIC Construction Investment Fund, told the Financial Associated Press that the new jobs and unemployment rate in the non-farm payrolls report greatly exceeded market expectations, greatly strengthening the possibility that the Federal Reserve would announce a reduction in bond purchases more quickly, and market liquidity would gradually enter a stage of contraction, precious metal support would be broken, and gold and silver would plummet. In addition, a number of Fed officials have recently continued to release details of the plan to scale back bond purchases, which also indicates that the Fed is approaching to scale back its bond purchases.
Wan Yijing pointed out that the strong employment data could be an effective support for Federal Reserve Chairman Colin Powell to start hinting at a reduction in bond purchases as early as the end of August. But in the long run, inflation is still higher than the Fed's target, so the Fed tends to maintain a loose monetary policy, supporting the price of gold.
Gu Jiannan expects the US employment data to rise further in the future, and the market expectations for Taper will also be further strengthened. The global central bank meeting at the end of August and the Fed's interest rate meeting in September are likely to unleash Taper's will. In addition, the supply of US debt will also be an important driver of the rise in nominal interest rates. Although the supply of US debt is now constrained by the debt ceiling, suppressing nominal interest rates, the US debt ceiling problem is also likely to be resolved by the end of September, when rising nominal interest rates will drive precious metals prices down again.
