Precious metal prices fell back at a high level on Wednesday. COMEX gold futures closed down 1.75% at $1920.2 / oz, while COMEX silver futures closed down 0.89% at $27.395 / oz. A jump in US bond yields put pressure on precious metals prices to fall.
In the closely watched US Senate election in Georgia, the Democratic Party won all two seats, and US Democrats won both houses of Congress. Investors expected stronger economic growth, stronger market risk appetite, a sharp rise in US stocks and a pullback in precious metals prices. European and American government bond prices fell further, and the yield on 10-year US Treasuries rose above 1 per cent for the first time since March 2020. Novel coronavirus of the United States diagnosed more than 21 million cases, and the positive rate of novel coronavirus in Los Angeles exceeded 20%. The German national blockade was extended until the end of the month, and the European Union authorized the conditional promotion of the use of Moderna vaccine The U.S. Capitol has been blocked because of riots and election certification has been suspended.
The December ADP report showed that the number of ADP in the United States fell by 123000 in December. Employment in both large and small enterprises is declining, while employment in medium-sized enterprises has increased. Employment in the service sector fell the most. The market is expected to lower its forecast for non-farm payrolls in December after the release of the sharp decline in ADP.
The minutes of the Fed's December meeting showed that all officials supported the pace of bond purchases, saying that "scaling back bond purchases" would be similar to 2013-14. The Fed has begun to think about how to gradually scale back its quantitative easing, which is expected to provide a boost to the dollar index. The current jump in US bond yields driven by market risk appetite and the expectation that the Fed will scale back its bond purchases have put pressure on precious metal prices to fall, and we believe that precious metal prices will continue to fluctuate, watching whether the non-farm payrolls data for October exceeded expectations.
