At 3: 00 a.m. in Beijing on December 17, the US Federal Open Market Committee ((FOMC)) announced the latest interest rate resolution, keeping the benchmark interest rate unchanged at 0% Rue 0.25%, in line with market expectations. The Fed said it would continue to buy at least $120 billion of bonds a month "until substantial further progress is made in achieving the committee's goal of maximum employment and price stability".
At a press conference after the Fed's interest rate resolution, Federal Reserve Chairman Colin Powell said that the Fed is committed to achieving its policy objectives and that monetary policy will continue to provide strong support to the economy. He reiterated that the uncertain outlook for the US economy will depend on the development of the COVID-19 epidemic, and the coming months are likely to be very challenging.
After the Fed announced the interest rate decision, the dollar index fell back, gold and silver first fell, COMEX gold main contract as high as 1870 US dollars per ounce, COMEX silver main increase expanded to more than 3 per cent, as high as 25.64 US dollars per ounce, the highest level in more than a month.
The Federal Reserve left its benchmark interest rate unchanged and U. S. stocks closed mixed, with the Nasdaq at an all-time high. As of the close, the Dow closed down 44.77 points, or 0.15%, at 30154.54; the Nasdaq closed up 63.13 points, or 0.5%, at 12658.19; and the S & P 500 index closed up 6.55, or 0.18%, at 3701.17.
The Federal Reserve reiterated its position on monetary easing, taking an all-time high for earnings.
At 3: 00 a.m. in Beijing on December 17, the US Federal Open Market Committee ((FOMC)) announced the latest interest rate resolution, keeping the benchmark interest rate in the range of 0% muri 0.25%, keeping the excess reserve ratio (IOER) at 0.1%, and the discount rate at 0.25%, which is in line with the general expectations of the market. The meeting is the Fed's last policy meeting of the year.
The Fed said it would continue to buy at least $120 billion of bonds a month "until substantial further progress is made in achieving the committee's goal of maximum employment and price stability". The Fed says these asset purchases help promote smooth market operations and loose financial conditions, thereby supporting the flow of credit to households and businesses. But the committee did not say it would extend the purchase period.
The Fed expects the US GDP to shrink less in 2020 than it forecast in September, and the growth rate in 2021 and 2022 will be higher than the forecast in September. In addition, the median Fed forecast shows that interest rates will remain near zero until the end of 2023. The bitmap of the Fed's path to raising interest rates shows that the Fed is expected to keep interest rates at current levels until 2023, the same as in September.
After the announcement of the interest rate resolution, the probability that the Fed will keep interest rates in the 0.25% range of 0% will be 100% in January, and the probability of raising interest rates by 25 basis points to 0.25% will be 0%. The probability of keeping interest rates in the 0.25% range of 0% in February next year is 100%, and the probability of raising interest rates by 25 basis points is 0%, which is the same as before the announcement.
At a press conference after the Fed's interest rate resolution, Federal Reserve Chairman Colin Powell said that the Fed is committed to achieving its policy objectives and that monetary policy will continue to provide strong support to the economy. He reiterated that the uncertain outlook for the US economy will depend on the development of the COVID-19 epidemic, and the coming months are likely to be very challenging.
Powell said that the pace of economic improvement has slowed in recent months, and the future path still faces a high degree of uncertainty. Unemployment continued to rise in November, the pace of improvement in the job market has slowed, and the Fed will not ignore the millions of unemployed. But Powell said the Fed believes there are fewer downside risks now than in September.
Powell said the Fed provided additional guidance for bond purchases with the goal of providing strong support to the U. S. economy. The Fed will continue to increase its holdings of Treasuries. Powell also said that the novel coronavirus epidemic has had a significant impact on inflation, and the overall inflation level in the United States is still lower than the long-term target. It is impossible for the US economy to achieve a full recovery until people feel safe. With regard to novel coronavirus vaccine, Powell said that major challenges and uncertainties surrounding the vaccine still exist.
The Federal Reserve left its benchmark interest rate unchanged and U. S. stocks closed mixed, with the Nasdaq at an all-time high. As of the close, the Dow closed down 44.77 points, or 0.15%, at 30154.54; the Nasdaq closed up 63.13 points, or 0.5%, at 12658.19; and the S & P 500 index closed up 6.55, or 0.18%, at 3701.17.
Silver has an eye-catching performance.
After the Fed announced the interest rate decision, the dollar index fell back, gold and silver first fell, COMEX gold main contract as high as 1870 US dollars per ounce, COMEX silver main increase expanded to more than 3 per cent, as high as 25.64 US dollars per ounce, the highest level in more than a month.
"in fact, gold has risen 4.7 per cent since November 30, mainly because of the still severe epidemic in the US and expectations of a decline in the dollar index as a result of monetary easing." Hua Li, an analyst at Huarong Rongda Futures, said that from the perspective of the epidemic, the third round of epidemic in the United States since mid-October has intensified. The number of new confirmed cases in a single day is not only far ahead of two rounds, but also continues to rise. In the past week, the daily average of new confirmed cases in the United States is 223000, the weekly average since records began. The deterioration of the epidemic has once again cast a shadow over the short-term US economy, which may stimulate gold prices to rise.
Zeshang Futures Precious Metals analyst Zheng Hong told Futures Daily that in terms of risk aversion, the negative factors in gold prices weakened due to the hindrance of vaccine progress. According to him, one of the logic of the overall decline in precious metals in November is that Pfizer and AstraZeneca have made great progress in vaccines, with a rebound in market risk appetite leading to capital outflows from safe-haven assets such as gold. However, due to a shortage of raw materials and capacity constraints, Pfizer shipped only half of its expected vaccine this year, while mass vaccination next year will be postponed, making the early negative factors of precious metals fade.
"at present, real interest rates on US bonds have fallen to-1 per cent, the dollar index has fallen sharply to the 90th line, and precious metals fundamentals are highly profitable." Zheng Hong said that due to the high incidence of the epidemic in the United States since November, the number of new confirmed cases has repeatedly exceeded 200000 a day. Under the absence of fiscal stimulus policies and the resumption of government control measures, the employment situation in the United States in November is extremely grim. The new non-farm payrolls data nearly halved, and the weakening fundamentals gradually built up the strength of precious metals. It is worth noting that, at present, although the market has picked up, the willingness to hold positions in gold is still not high. As of December 15, SPDR gold ETF position was 1170.15 tons, since November position fell below 1200 tons, showing a continuous downward trend.
In the case of gold, gorgeous believes that with the dust settling in the US election, widespread vaccination and the introduction of the US fiscal stimulus bill, market expectations of a future economic recovery are rising again, which partly limits the rise of the gold price. On the whole, Hua Li believes that the influencing factors of gold price long and short are relatively tight, and the overall market trading tends to be cautious.
For silver, Zheng Hong said that the recent trend of silver is stronger than gold, on the one hand, the variety of silver is relatively small and more flexible than gold, and on the other hand, silver has a stronger industrial attribute. "Photovoltaic silver paste is a very important link in the photovoltaic industry chain that the market has paid close attention to recently. If the epidemic situation is improved in 2021, the large-scale production of solar cells will have a greater industrial demand for silver, thus forming a profit." Zheng Hong said.
Strong support for short-term demand for iron ore
Wang Zeyong, a metal analyst at South China Futures, said that at present, the increment of iron ore demand is relatively deterministic, and hot metal production has been high since the fourth quarter due to the strong resilience of finished wood demand. According to him, in the winter of previous years, the requirement of environmental protection production limit was an important factor restricting the increase of domestic steel production, but this year, under the background of the epidemic, it is strictly forbidden to limit production across the board, and most of the environmental protection production restrictions are mainly at the sintering end. In addition, steel enterprises have invested in environmental protection facilities for many years, the production capacity that does not meet the requirements of environmental protection is already a small number, and the start of blast furnace construction is obviously on the high side. Early water thread strict inspection, short-flow wood supply has been reduced, long-process production has increased, but also formed a strong support for iron ore demand.
From an overseas point of view, overseas hot metal production has recovered rapidly recently, with production of 35.44 million tons in October, narrowing the year-on-year decline to 3.87%, leading to a pick-up in iron ore demand. Data show that demand for goods from abroad has increased, with the proportion of Brazilian mine exports to China falling to 74.2% in October from 84.2% in September. "the increment of overseas demand diverts China's iron ore supply, reducing the pressure on the port to accumulate storage. Iron ore domestic supply and demand fundamentals continue to improve, driving prices continue to rise strongly. " Wang Zeyong said.
On the supply side, Wang Zeyong believes that there are also many short-term profit factors. Total Australian shipments fell by 1.661 million tons month-on-month this week, mainly due to the impact of the hurricane on Friday, which is expected to be short-lived and have little impact on the total. In mid-December, members of the Australian Parliament recommended that the Western Australian government stop issuing new iron ore mining approvals. Although Australia has not yet passed legislation on this, it has triggered market concerns about iron ore supply. Vale's shipments fell significantly in November and faced some pressure in December.
In his view, under the premise of maintaining the current speed and efficient production in other mining areas, iron ore output in the fourth quarter may reach 89.7 million tons, and it is estimated that there will still be a shortfall of 5 million-10 million tons in actual annual iron ore production in 2020. Earlier, Vale announced plans to resume production at the Samako mine at the end of the year, which had an annual output of about 30.5 million tons. In order to exceed expectations, it is necessary to continue to pay attention to whether there is an impulse in shipments at the end of the year.
"because the output of the steel plant was much higher than that of the same period in previous years, the raw material replenishment was carried out in advance in mid-November, and the port inventory stopped accumulating and decreased again. By the beginning of December, the port inventory had dropped by 0.5% compared with the beginning of the year." Wang Zeyong said that at present, the supply and demand pattern of iron ore remains good, the resumption of overseas blast furnace production brings more demand, ore prices remain strong in the short term, we still need to pay attention to changes in market sentiment, high positions need to pay attention to risks.
In terms of the long term, the Shenyin Wanguo Futures Research Institute believes that recently, regulators have begun to consult on the dynamic adjustment of iron ore deliverables and premium, if the regulatory policy is implemented, the expansion of the scope of deliverables and the adjustment of premium water may have a certain pressure on the valuation of iron ore far-moon contracts, and the emotional face of iron ore bulls has basically peaked. Forward 2105 and 2109 contracts are also likely to be adjusted downwards in the short term, but far-month contracts are still driven upwards when optimistic expectations for next year cannot be falsified for the time being.
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