Strong dollar index gold and silver prices will continue to fall

SMM: precious metals prices continued to fall on Thursday, as the dollar continued to rise, gold prices fell to an one-month low. COMEX gold futures closed down 0.6 per cent at $1867.9 an ounce, while COMEX silver futures closed down 0.15 per cent at $23.325 an ounce.

On Thursday, the dollar index rose 0.5% to 93.92, its highest level in more than a week. On the one hand, safe-haven buying is still driving the dollar, on the other hand, yesterday's economic data showed that the US economy grew at a record pace in the third quarter, and the trend of initial jobless claims in the United States improved.

The United States has added more than 80, 000 new cases of novel coronavirus in a single day; Fauci does not expect the United States to return to normal until 2022; and Germany plans to launch COVID-19 vaccination this year. Both Germany and France have imposed new blockades to contain the spread of the second wave of the epidemic.

Despite the second outbreak, the ECB left policy unchanged on Thursday and did not introduce more stimulus measures, but the ECB also hinted that it would provide new monetary easing at its next meeting in December.

In the week ended Oct. 24, the number of U.S. jobless claims fell to 751000, below the average forecast of 775000 from 791000 the previous week. In the US, GDP grew at an annualised rate of 33.1 per cent in the third quarter, an all-time high, but still shrank 2.9 per cent from a year earlier.

Yesterday, the World Gold Council released "Gold demand Trends in the third quarter of 2020". From the beginning of the year to the end of the third quarter, total global gold demand was 2972.1 tonnes, down 10 per cent from a year earlier. Global gold demand fell to 892.3 tons in the third quarter, the lowest quarterly aggregate demand since the third quarter of 2009. Although the overall demand for gold has declined, third

Global gold investment demand rose sharply in the quarter, up 21% from a year earlier. In the third quarter, there was a small net sale of 12 tonnes of gold demand from central banks around the world.

Biden continues to lead incumbent President Trump across the country ahead of Election Day on November 3, but competition in swing states is fiercer. The strong rise in the dollar index is the main reason for the recent decline in gold prices. The logic that we are bullish on the continued strength of the dollar index is mainly based on the following three points: first, the deterioration of the epidemic in the euro zone, the relative quality of the epidemic in the United States and Europe will support the dollar index; second, funds are continuing to flow into dollar index futures; third, the sharp rebound in long bond spreads between the United States and Germany also supports the dollar index. We believe that at present, precious metals are still in the process of periodic adjustment. In this round of decline, the international gold price will fall below the previous low of US $1850 and will continue to explore the US $1800 / oz front line for support. Silver prices will continue to fall more sharply and are expected to fall to the $20 / oz line.