Mainland Futures-Gold from the Perspective of China's Economic change-Shanghai Metals Market

Hot Keywords

  • Market commentary
  • Rare earth
  • Aluminium
  • Macroeconomics
  • Copper
  • Zinc
  • Sales data
  • Customs data
  • MMi Iron Ore Port Index
  • Inventory data
  • precious metals
  • Rare earths
  • Nickel
  • Iron ore
  • Futures movement

Mainland Futures-Gold from the Perspective of China's Economic change

Translation 10:26:40AM Aug 20, 2019 Source:Mainland futures
The content below was translated by Tencent automatically for reference.

SMM News: since the price of gold exceeded $1480 / ounce, breaking the 2011 high to the low of 2015, you can see around the position of $1550 to $1580 / oz at a later stage. Aug. 13 gold prices have actually hit $1546 an ounce, although there is a brief pullback, but the problem is not big, we are still firmly optimistic about the value of gold allocation. First of all, from the perspective of Chinese economic data, by extracting the trend of the Ke Qiang Index and the gold price from 2014 to 2019, we find that there is a very obvious negative correlation between the Ke Qiang index and the gold price. The Ke Qiang Index is considered to be more representative of the reality of the Chinese economy, including three economic indicators, namely, power consumption, railway transport and bank loans. Compared with the findings, the relationship between the two has been stronger since the second half of 2017. Therefore, we believe that China's strong economic growth is not conducive to the price of gold. On the contrary, if the downward pressure on the Chinese economy is greater, it will be conducive to the price of gold. From the perspective of historical data, the disappearance of the M1-M2 scissors gap in 2008 means that the decline in business vitality has a drag effect on the economy. In November of the same year, the social finance-M2 growth gap began to turn negative, and the central bank cut interest rates four times in 2008, while the corresponding gold price began to rebound gradually from the lowest point of 138.89 yuan / g in more than a decade. Similarly, the social finance-M2 growth gap also began to turn negative in April 2015, and the corresponding gold price lagged behind by half a year to one year to begin the upward cycle. For now, the gap between year-on-year M1-M2 growth fell to a low of-8.0% in January, and China's M1-M2 growth rate is still in a negative range, coupled with the fact that the central bank announced on Saturday that the LPR formation mechanism would lower the real interest rate on deposits and loans, which is actually a way to cut interest rates. It is also a confirmation of China's economic downturn. In fact, this two-track integration track was put forward at the meeting of the Politburo at the beginning of the year, and then mentioned again at the Politburo meeting last month. It has also shown the Chinese government's concern about the economic downturn and the need for the central bank to exert its efforts to maintain "steady growth."

Well, in this case, gold prices naturally form an asset risk aversion role in China. With the help of market sentiment, gold prices will cause a wave of gains at the spot and futures ends. On the international front, the two-year and 10-year US and British yields were upside down last week, of which 10-2 US bonds were upside down for the first time since 2007, not because short-term interest rate rises were too fast. it is pessimistic about expectations of economic growth. So, driven by both interest rates and risk aversion, let's take a look at Powell's statement at the annual meeting of the global central bank at 10:00 on Friday evening, just three weeks after the last Fed meeting. But the Fed is already facing inverted US bond yields and additional commodity tariffs. Historically, gold prices have risen as much as 3 per cent since 10 Jackson Hole annual meetings in the past 13 years. A pullback is expected on Friday, as it did in the run-up to the Fed's last decision, and a wave of gains is expected after the market mood has adjusted.

Source: Wu Meijie, mainland Futures

Key Words:  Gold  precious metals  silver 

Mainland Futures-Gold from the Perspective of China's Economic change

Translation 10:26:40AM Aug 20, 2019 Source:Mainland futures
The content below was translated by Tencent automatically for reference.

SMM News: since the price of gold exceeded $1480 / ounce, breaking the 2011 high to the low of 2015, you can see around the position of $1550 to $1580 / oz at a later stage. Aug. 13 gold prices have actually hit $1546 an ounce, although there is a brief pullback, but the problem is not big, we are still firmly optimistic about the value of gold allocation. First of all, from the perspective of Chinese economic data, by extracting the trend of the Ke Qiang Index and the gold price from 2014 to 2019, we find that there is a very obvious negative correlation between the Ke Qiang index and the gold price. The Ke Qiang Index is considered to be more representative of the reality of the Chinese economy, including three economic indicators, namely, power consumption, railway transport and bank loans. Compared with the findings, the relationship between the two has been stronger since the second half of 2017. Therefore, we believe that China's strong economic growth is not conducive to the price of gold. On the contrary, if the downward pressure on the Chinese economy is greater, it will be conducive to the price of gold. From the perspective of historical data, the disappearance of the M1-M2 scissors gap in 2008 means that the decline in business vitality has a drag effect on the economy. In November of the same year, the social finance-M2 growth gap began to turn negative, and the central bank cut interest rates four times in 2008, while the corresponding gold price began to rebound gradually from the lowest point of 138.89 yuan / g in more than a decade. Similarly, the social finance-M2 growth gap also began to turn negative in April 2015, and the corresponding gold price lagged behind by half a year to one year to begin the upward cycle. For now, the gap between year-on-year M1-M2 growth fell to a low of-8.0% in January, and China's M1-M2 growth rate is still in a negative range, coupled with the fact that the central bank announced on Saturday that the LPR formation mechanism would lower the real interest rate on deposits and loans, which is actually a way to cut interest rates. It is also a confirmation of China's economic downturn. In fact, this two-track integration track was put forward at the meeting of the Politburo at the beginning of the year, and then mentioned again at the Politburo meeting last month. It has also shown the Chinese government's concern about the economic downturn and the need for the central bank to exert its efforts to maintain "steady growth."

Well, in this case, gold prices naturally form an asset risk aversion role in China. With the help of market sentiment, gold prices will cause a wave of gains at the spot and futures ends. On the international front, the two-year and 10-year US and British yields were upside down last week, of which 10-2 US bonds were upside down for the first time since 2007, not because short-term interest rate rises were too fast. it is pessimistic about expectations of economic growth. So, driven by both interest rates and risk aversion, let's take a look at Powell's statement at the annual meeting of the global central bank at 10:00 on Friday evening, just three weeks after the last Fed meeting. But the Fed is already facing inverted US bond yields and additional commodity tariffs. Historically, gold prices have risen as much as 3 per cent since 10 Jackson Hole annual meetings in the past 13 years. A pullback is expected on Friday, as it did in the run-up to the Fed's last decision, and a wave of gains is expected after the market mood has adjusted.

Source: Wu Meijie, mainland Futures

Key Words:  Gold  precious metals  silver