SMM News: at the beginning of the week, concerns about the epidemic focused on the outbreak, and the market sell-off led to a general fall in stock markets and commodities. Precious metals pullback, domestic gold prices once fell below 400 yuan / g, silver closed by the limit.

The outbreak triggered deflation fears and hit the market.

At present, the total number of confirmed cases of COVID-19 in the world has exceeded 31 million, and more than 300000 new cases in a single day have reached the highest level since the epidemic, and there are obvious signs of a second outbreak in most European countries. The epidemic worsened most in France, with more than 13000 new infections in a single day; parts of Madrid, Spain, were re-blockaded on September 21, affecting millions of people; and British Prime Minister Johnson said a second wave of outbreaks in Britain was inevitable and that new coercive measures would be taken, which would deal a heavy blow to the economy if the national blockade was triggered again.

Despite the recent positive macro data, concerns about the economic outlook linger, and the weakness of crude oil has shown weakness in consumption shrouded by the epidemic. Market trading deflation expectations have led to a sharp adjustment in stock markets and bulk industrial products, but in the context of global easing, the long-term deflation logic does not hold.

The lack of staying power for easing in the United States makes the market lose the sense of security Initiative.

ISM manufacturing PMI in the United States recorded 56 in August, the highest level since January 2019. Non-farm data added 1.371 million jobs in August, and the unemployment rate fell more than expected to 8.4%, falling for the fourth consecutive month and falling to single digits for the first time since March. Improved economic data and pending further easing in the United States have made the market sceptical about the strength of the subsequent stimulus.

The Federal Reserve released its latest interest rate resolution last week, saying it would leave interest rates unchanged until inflation exceeds 2% and maximizes employment. The bitmap shows that the Fed will keep interest rates at current levels until the end of 2023. Federal Reserve Chairman Colin Powell also reiterated that economic development may need more fiscal and monetary support, but did not give a clear definition of the average inflation target and guidance for the next step of easing measures. In terms of fiscal policy, the $500 billion "shrunk version" plan was rejected in early September, and moderates in the US House of Representatives released a $1.52 trillion compromise stimulus package, but House Speaker Nancy Pelosi said she insisted that the size of the new stimulus bill should reach at least $2.2 trillion. The difficulty of the new bailout package has led to a lack of confidence in the strength of the stimulus, and the Fed's balance sheet has been stuck at 7 trillion for months. However, if the outbreak triggers a market stampede, it may speed up the introduction of reverse policies to avoid heavy damage to the economy.

The dollar pushes back against pressurized goods

Since the beginning of this year, the negative correlation between gold and the dollar has strengthened, and the recent rebound in the dollar has put pressure on the price of precious metals. On the one hand, the epidemic in the United States is beginning to improve, while Europe is mired in another outbreak of haze, and the economic data of the United States is also better than that of Europe. On the other hand, the eighth round of negotiations between Britain and the EU ended, and the EU said mutual trust between the two sides had been seriously damaged. Britain's passage of the internal market bill would make the EU tougher on the management of any trade agreement, and the risk of Brexit without an agreement would keep the euro and sterling weak. There is great uncertainty about whether the US dollar can continue to be strong due to the epidemic, policy and other factors, but in the context of the unprecedented "release of water", the debt pressure of the US government will force the US dollar into a weak cycle, and it is difficult for the US dollar to rebound.

The medium-and long-term bullish logic of gold remains unchanged.

In the current economic environment, the release of short-term panic is difficult to trigger a repeat of the liquidity crisis similar to that in March, and the outbreak may force stimulus policies to accelerate and trigger a rebound in commodity prices. Deflation is difficult to form a long-term impact, the slow rise of inflation in the future will lead to the decline of real interest rates, and the logic of medium-and long-term rise in gold prices has not changed fundamentally. The world's largest gold ETF-SPDR position in the last two days surged nearly 30 tons to 1278 tons, a new seven-year high. As the US election gradually enters a critical period, the game between big powers and the geo-situation are still expected to support the demand for risk aversion. At the beginning of the week, the shadow line shows that the lower support still exists, and it is still a good opportunity to lay out more gold after the panic plate escapes. As for silver, it has been very flexible since this year, and the logic of short-term rise and fall is not clear. It is suggested that the inner silver short position should be celebrated to avoid the risk of sharp fluctuations in the outer disk during the National Day.

This week, Federal Reserve Chairman Powell will speak on a number of occasions on Tuesday, Wednesday and Thursday, and other officials will also appear frequently, or there will be clues about the follow-up policy direction, watching whether Powell can break the deadlock and cause renewed volatility in gold and other markets.