SMM News: recent fluctuations in precious metals, especially gold prices jump up and down. The main reason is that it is affected by the trade friction between China and the United States. However, the risk aversion sentiment in the market receded quickly, and the gold price quickly fell back to the early concussion range after a brief break, indicating that the short-term gold price still maintained the original route of weak volatility. From a technical point of view, COMEX gold is in a triangular range, with the upper pressure line and the lower support line getting closer and closer. Focus on the market's choice of direction.
I. High demand for risk aversion driven by trade frictions between China and the United States
On May 10th the US raised tariffs on Chinese goods by more than $200 billion, and the tax rate on more than 5700 categories of Chinese goods rose from 10 per cent to 25 per cent. In response, China has also decided to impose tariffs on some of the $60 billion list of US goods on which tariffs have been imposed, with tariffs of 25 per cent, 20 per cent or 10 per cent, respectively. A tariff of 5 per cent will continue to be imposed on goods subject to the previous 5 per cent tariff. The dollar index fell sharply late that night as a result of China's tariff increases, but then withdrew. U. S. stocks tumbled again, with the Dow down more than 600 points, its biggest drop since January 3. The price of gold jumped sharply.
After a sharp rally last Monday, COMEX gold fell back for six consecutive trading days, closing in on its previous low position again. We believe that gold will be sought after by strong risk aversion demand when risk assets fall sharply in the United States, but when risk assets return to stability, the decline of risk aversion demand will be very fast, which is also the main reason why gold prices grow and fall quickly.
II. European geopolitics are equally unstable
1) Brexit is still deadlocked
British Labour Party leader Corbyn said cross-party negotiations have tried their best to oppose Prime Minister Theresa May's Brexit agreement, which means that six weeks of talks between the Conservative Party and the Labour Party will eventually break down. Britain's delay in passing the Brexit deal has led to an almost stalemate. Theresa May has been urged to step down this summer because of the Brexit stalemate and the poor performance of the Conservatives in the recent local elections. May is making a fourth effort to pass her Brexit deal by a parliamentary vote in the week of June 3. If the fourth vote still fails, May will announce her resignation. We believe that Brexit has been slow, but we need to continue to pay attention, if there is a hard Brexit will have a greater impact on market sentiment, resulting in fluctuations in the price of gold.
2) European "powder keg" Italy "restless"
At a time when the European Parliament election is approaching, Italy, which has long been known as a "powder keg" in Europe, has recently kept on having "moths", and last week Italian leaders once again made remarks that worried the market.
Italian Deputy Prime Minister Salvini (Matteo Salvini) criticized EU policy on Wednesday, making investors nervous about elections in the region. Mr Salvini said EU budget rules were "starving the continent" and must be changed. A day earlier, he had said Italy should be ready to break the rules. According to the Italian ANSA, Salvini said, "Italy needs an impact like US President Donald Trump, and we need to ignore the rules;" If the Northern League party gets a good result in the EU election, it will tear up all the rules of the EU to kill sha' Italy. " Mr Salvini also said the government was prepared to break the 3 per cent budget deficit limit if necessary or allow debt to exceed 130-140 per cent of GDP to stimulate employment. Salvini also said on Thursday that if his party did well in the European Parliament elections later this month, he would "tear up" those rules that "strangle sha" Italy. The attitude of the Italian authorities, on the one hand, the upcoming European parliamentary elections face great uncertainty, but also cast the shadow of the European debt crisis again.
III. Us economic data remain strong
Although the recent C position has been dominated by Sino-US trade frictions, US economic data are equally eye-catching. The University of Michigan consumer confidence index rose to 102.4 in May, a 15-year high. At the same time, the increase in new housing starts in the United States announced last week was higher than expected, with the total number of new housing starts annualized to 1.235 million in April, up from the previous value of 1.139 million and the expected 1.205 million. It suggests that the decline in mortgage rates is beginning to support the beleaguered housing market. Initial jobless claims fell more than expected the previous week, with 212000 early jobless claims in the United States as of May 11, below the previous value of 228000 and expectations of 220000, suggesting that the job market continued to strengthen and should be able to support the economy. In addition, the total number of construction permits in the United States in April was 1.296 million, higher than the previous value of 1.288 million and the expected 1.29 million. The Philadelphia Fed manufacturing index was 16.6 in May, higher than the previous value of 8.5 and the forecast of 9.
But US retail sales and industrial output figures released on Wednesday fell short of expectations. The data showed that US retail sales unexpectedly fell 0.2 per cent in April, below the expected 0.2 per cent growth, which could cast a shadow over US economic growth in the second quarter. And the monthly rate of industrial output fell 0.5% in April, which is expected to be flat, after a 0.1% drop in the previous value, while manufacturing output fell for the third time in four months.
The continued strength of economic data is also an important factor in ensuring the rise of the dollar, with the dollar index once again above 98 points as of press time, close to the previous high.
IV. ETF & CFTC position report
The ETF position of gold and silver remained low, with gold ETF holdings staying at 736.17 tons for two weeks in a row. Although silver ETF holdings increased slightly in the previous period, they remained below 10000 tons.
According to the CFTC report, the trend of non-commercial net long positions in gold and silver is at odds. Gold non-commercial positions increased for four consecutive weeks, reaching 124536 as of May 14; silver non-commercial net positions returned to below the zero axis, to-2209 as of May 14.
V. Future prospects
Affected by the friction between China and the United States, gold rose sharply recently, but with the return of risk sentiment, gold prices returned to the early concussion range. It shows that the short-term gold price still maintains the original route of weak shock. From a technical point of view, COMEX gold is in a triangular range, with the upper pressure line and the lower support line getting closer and closer. Focus on the market's choice of direction. Short-term European risks remain, with the euro bearing pressure on the dollar. In the context of the continued strength of the dollar, precious metals will only have a temporary rebound, the overall trend we think is still weak and volatile. Short-term attention to the minutes of the US interest rate meeting, Fed officials' speeches, US and European economic data, and so on.