SMM News: after several consecutive days of sharp decline in the precious metal plate, today's silver price trend continues to be depressed. On the spot side: spot silver prices fell more than 5% in the day to 23.17 US dollars per ounce. Futures market: silver futures prices continue to decline, now at 4719 yuan / kg, down 8.21%, the lowest hit the 4710 mark, refreshing a two-month low.
Where is the bottom line of silver price all the way down?
Silver prices continue to plummet today, first of all, the impact on the news.
One was that Evans, president of the Federal Reserve Bank of Chicago, said last night that the Fed still needed to discuss the new average inflation target, but "we can start raising interest rates before we start to reach an average of 2%." He also said more quantitative easing may not give another boost to the US economy. The outlook for the Fed to raise interest rates was hawkish, once again discouraging market expectations of monetary easing and precious metals falling under pressure.
The other news is that Europe may restart the novel coronavirus blockade, which in turn exacerbates negative sentiment in the market and because of the stronger industrial nature of silver, while precious metals, especially silver, are seen as commodities generally sold off.
At the same time, contrary to the collapse in gold and silver, the dollar index performed well. Since Friday, the dollar index has risen continuously, hitting a high of 93.893 and hitting its highest level in more than a month. Generally speaking, there is a negative correlation between the dollar and gold. Gold will rise when the dollar index falls; when the dollar index rises, gold will fall, which will put pressure on gold and silver to some extent.
The US index hit a two-month high, and gold and silver continued to run weakly.
The strength of the US dollar index hit a two-month high, fears of a second epidemic and continued fiscal stalemate in the United States and other factors pushed gold and silver down for three trading days in a row. In the short term, gold and silver are expected to continue to run weakly, especially silver with strong commodity attributes has formed a downward trend after panic selling, so there is still the possibility of inertia decline in the future. On the whole, China is about to usher in the Mid-Autumn Festival National Day holiday, it is recommended that short-term investors temporarily light positions or wait and see, in order to avoid the risk of holiday outings.
However, based on the judgment that there is no liquidity problem at present, we believe that gold is more emotional repression, in essence, there is no possibility of a sustained collapse. In the long term, fundamentals are still good for gold, so it is still recommended to buy gold. Because the Fed has hinted that it will not raise interest rates until 2023, the loose background of low interest rates still supports gold prices. And inflation expectations, risk aversion, etc., will also continue to boost gold prices, especially expectations of future fiscal stimulus and slow economic recovery are expected to continue to raise the inflation hub, coupled with the economic uncertainty around the epidemic and the US election, geopolitical situation, international economic and trade frictions, etc. will increase safe haven demand, thus continue to support gold prices.
Secondly, the recent cooling of investment demand for silver accelerated the decline in silver prices. Silver holdings in the world's largest silver ETF--SLV fell to 17211.13 tonnes as of Sept. 22, climbing to a record high of 18072.29 tonnes on Aug. 13, according to data. High inventories and weak industrial demand will exert great downward pressure on silver under the ebb of investment demand.
In addition, in the early period of the rise in precious metals, the gold-silver ratio continued to repair, a large number of speculative capital flows to silver, and even exceeded the fundamentals of supply and demand. Therefore, affected by liquidity, coupled with the existence of the industrial attribute of silver, its price volatility is greater than that of gold.
Overall, central banks, including the Federal Reserve, Europe, the United Kingdom, Russia and other central banks did not release more stimulus signals in the short term, the loose expectations of the market failed, and concerns about the epidemic triggered a shock fall in precious metals. However, in the long run, nominal interest rates on US debt will be dominated by low shocks in the future, and the US election will gradually enter a critical period, and the geographical situation is still expected to support the safe haven demand for precious metals.