SMM News: this week, the European epidemic rebound situation is grim, triggering market concerns about the recovery of the real economy, affected by the financial market to meet the overall impact, all kinds of asset prices high collective collapse. Given that weak demand in the real economy weakens the rebound in inflation expectations, silver futures, which are highly correlated with market inflation expectations, fell sharply.

From the perspective of policy changes, on the Fed's September interest rate resolution, which ended earlier, Federal Reserve Chairman Powell was "tight-lipped" and did not give more information about the increase in easing, and Powell's expression of inflation tolerance was less than market expectations. Although the Fed's dovish position continues, the intensity of easing has slowed down. The two parties remain deadlocked in the absence of agreement on many aspects of the fiscal stimulus bill, and a high degree of uncertainty about the policy outlook weakens bullish enthusiasm for precious metals.

In terms of real interest rates, economic repair slows and oil prices remain weak, and inflation expectations that continue to strengthen in the early period are falsified periodically. In addition, there are voices in the market, there are doubts about the role of the Fed's average inflation system in allowing inflation overshoot to boost inflation in the real economy. Inflation expectations are under pressure after a rapid rise in the previous period, and there is a lack of upward impetus at this stage. In the case of limited downward room for nominal interest rates to maintain volatility, the risk aversion property of precious metals is difficult to be reflected.

Looking forward to the future, under the background of the resurgence of the epidemic in Europe and the United States, the progress of the global novel coronavirus vaccine is unknown. If Europe and the United States fail to provide a new round of large-scale fiscal stimulus support, the real economies of Europe and the United States will remain in a stalemate, and it will be difficult for inflation expectations to pick up further. As the US election approaches and market uncertainty increases, volatility in gold and silver is expected to intensify pressure in the short term. In the longer term, the repair of the US economy in the post-epidemic crisis era is still limited, and a blow to consumer confidence in the absence of policy support is not conducive to economic recovery, so there is a good chance that fiscal stimulus will be shelved eventually. Under the new monetary policy framework of the Federal Reserve, nominal interest rates on US bonds will fluctuate mainly at low levels in the future, while the relaxation of the inflation target will be good for the rebound of medium-and long-term inflation expectations, but the Fed's tolerance for high inflation is relatively limited, which to a certain extent weakens the precious metals, especially the space above silver, which is dominated by the controlled risk of silver, while gold bargain buying remains the same, and continue to recommend long gold / silver ratio.