Yesterday, the domestic futures market closed red in a large area, and the performance of Shanghai Silver was even more eye-catching, with an increase of more than 5%. Precious metals prices have continued to rise since December, with Shanghai silver up more than 20 per cent.
Industry insiders said that gold and silver prices were boosted by fears that a new round of epidemic would lead to more blockades and heightened risk aversion as a result of the recent discovery of a mutated novel coronavirus strain in the UK.
On December 20, local time, members of the US Congress reached the second largest stimulus deal in US history on the $900 billion novel coronavirus rescue bill, providing funds to the government and providing a long-term COVID-19 bailout. The news spurred the price of gold and silver to soar. "Silver has a stronger industrial nature and a certain 'periodic product' attribute, and this kind of stimulus policy has played a double role in promoting silver. In addition, silver has always been more flexible, so the increase is significantly greater than the increase in gold price." The above analysis of the industry said.
Li Xiaojie, a precious metals researcher at Hongyuan Futures, said that although vaccination work was in progress, the epidemic in Europe and the United States continued to deteriorate in winter, with poor economic data and weakening expectations for recovery, thus maintaining monetary and fiscal policy easing. In a statement after last week's interest rate meeting, the Fed made it clear that it would continue to buy at least $120 billion of bonds a month until substantial progress was made towards achieving maximum employment and price stability.
"on Monday morning, as the novel coronavirus epidemic spread, congressional leaders agreed on a spending plan of about $900 billion to boost the US economy. Lawmakers will have to consider and pass a bill on one of the largest economic bailouts in US history in a very short period of time." Li Xiaojie said the plan will distribute $600 directly to most Americans, as well as $300 a week in supplementary unemployment benefits through the end of March next year. Discussion of nearly four months of fiscal stimulus finally landed, coupled with photovoltaic and other clean energy facilities construction expectations next year, not only the financial attribute, the commodity attribute of silver has also been stimulated, so it rose sharply.
"the current market risk aversion is back, CFTC data show that hedge funds are increasing their holdings of gold and silver, but in the longer term, ETF data show that there is a lack of attention from medium-and long-term funds for the time being. At the same time, shorting the dollar is now a little crowded and could rebound at any time. " The above-mentioned industry insiders believe that gold and silver prices will remain strong in the short term, and the middle line may face the suppression of a rebound in the dollar.
Li Xiaojie believes that for some time in the future, the market will continue to pay attention to the progress of the epidemic in Europe and the United States around Christmas, and if it continues to deteriorate, gold and silver prices will maintain an upward trend. After the US fiscal stimulus landed, in addition to paying attention to the epidemic, another focus is the topic of Brexit. At present, the countdown to Brexit negotiations may occur at any time, and the overall bullish atmosphere in the market is strong. Macro monitoring indicators still show that the trend has not changed, considering that gold and silver have re-entered the price oscillation range in September, the technical side has a short-term demand for adjustment, it is recommended to invest cautiously.
Some institutions generally believe that silver prices may usher in a big market in the future, and the gold-silver ratio is expected to be substantially repaired downwards. The Flag report predicts that the price of silver will rise to $40 an ounce in the coming year, an increase of 70%. The Goldman Sachs report predicts that the price of silver is expected to reach $30 an ounce. The reason why institutions sing more silver, the key lies in the judgment of the gold-silver ratio, because every time the commodity bull market comes, the gold-silver ratio will fall below 50, but now the gold-silver ratio is still above 70. In March this year, the gold-silver ratio was still as high as 120.
ITC Futures Weekly said that the short-term need to guard against the Christmas holiday, overseas closed or risk aversion to the dollar caused by the disturbance to precious metals, but the overall will not fall sharply, it is recommended that bulls continue to hold, continue to be firmly bullish on gold and silver next year.
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