SMM News: [market Review and Analysis] yesterday gold prices fell further after the loss of important support, while the overall trend of silver is weaker than gold, a larger decline. This is mainly due to the recent influx of market funds into the US dollar under the influence of news such as repeated epidemics in Europe, which has put pressure on precious metal prices. in addition, concerns about economic repair have lowered market inflation expectations, so precious metal prices have fallen below the previous shock range. And from the recent performance of precious metals, its risk aversion property has been significantly weakened.
For ETF, SPDR gold ETF positions decreased by 11.09t to 1267.14 tonnes, while SLV Silver ETF positions continued to decline by 63.68t to 17214.03 tonnes.
On the data side, the composite purchasing managers' index fell to 54.4 in September, down from 54.6 in August, according to data released by IHSMarkit. The manufacturing PMI recorded 53.5, slightly higher than the expected and previous value of 53.1, while the services PMI fell slightly to 54.6 from 55. The data show a decline in business activity, which should be related to the epidemic.
As for the Federal Reserve, a number of officials said yesterday that additional fiscal policy support was needed. Federal Reserve Chairman Colin Powell said that companies' acceptance of the Fed's "main Street loan program" is only modest, but credit money has already flowed to them quite widely. The Fed has no plans to make any "major" changes to make it more widely adopted; more financial support may be needed.
Federal Reserve Vice Chairman Clarida also said that the economy has made progress, but unemployment remains high, small businesses still face great risks, need to consider additional fiscal policy, and will not even consider raising interest rates until the real inflation rate reaches 2%.
Fed Evans said interest rates would remain unchanged until full employment, inflation reached 2 per cent and overshoot; rates were not expected to rise until 2023; he expressed concern that expected bail-outs might not come.
Mr Rosengren said weak growth could prolong the Fed's 2 per cent inflation target, which would require interest rates to remain low for longer than expected; fiscal policy would be more helpful to the economy than adjusting its bond-buying programme, and more fiscal action would bring greater benefits to the economy. The Federal Reserve Mestre said that the economy has not achieved a broad recovery, and the recovery is unsustainable and still fragile, and financial support will be very much needed for the economic recovery.
[today's point of view] it is not difficult to see from the speeches of Fed officials that the support of US fiscal policy will play a very important role in the subsequent economic repair. As a result, the belated fiscal stimulus has filled the market with concerns about future inflation, putting pressure on precious metals. In addition, the recent rebound in the dollar index, so precious metals break the previous balance, the probability of further downside is higher.