Since February, affected by the improvement of the COVID-19 epidemic in the United States, US bond yields have risen, continuing to suppress precious metal prices. The yield on the 30-year US Treasury note rose to 2.26 per cent last night, the highest level since January 2020. Baiyin wide oscillation operation, Shanghai silver up to 6085 yuan / kg, once fell to 5385 yuan / kg before the Spring Festival. With the improvement of the epidemic in the United States in late February, the implementation of US fiscal policy and the recovery of the global economy, which triggered market expectations of re-inflation and a strong rising atmosphere in commodities, we expect silver to follow the market trend and continue to rise.
The yield on the benchmark 10-year Treasury note recently hit a near-one-year high, increasing the opportunity cost of holding non-income precious metals, which are generally weak during the Spring Festival. However, we find that the price trend of gold and silver is also divided because of the different commodity attributes, the commodity's boost to silver is stronger than the pressure of financial attributes on silver, and the price of silver is obviously better than gold, which reflects the inflation expectations of the current market.
On Monday, local time, the House Budget Committee decided to push forward the Biden administration's $1.9 trillion bailout bill by a vote of 19 to 16, which will be submitted to the House of Representatives for a vote later this week. we expect the US $1.9 trillion economic stimulus package to be passed by the weekend to boost market hopes for economic recovery, but at the expense of higher future inflation.
Affected by the epidemic, commodity prices, represented by crude oil, hit a recent low in March last year, but now prices have risen sharply, which will be reflected in the inflation data, which we expect to see a large increase in the second quarter compared with the same period last year.
The S & P 500 is still near record highs, up about 75% from its March low last year, and cryptocurrencies such as Bitcoin have risen sharply this year, even after Monday's plunge, given the market's relatively high valuations of risky assets. investors are more likely to hedge traditional safe-haven assets in the later stage. Recently, gold ETF and silver ETF continued to flow out, reflecting that the market has not yet turned its focus to precious metals again, and silver prices are still under pressure. Precious metal ETF is usually an important indicator of market sentiment, we think whether to increase its holdings will be an important signal to judge whether the market price can rise sharply in the future.
At the end of January, Powell said that now was not the time to discuss scaling back asset purchases, and in a recent public appearance, he reiterated that the Federal Reserve will maintain a loose monetary policy posture to support the economic recovery from the novel coronavirus pandemic. Global monetary policy tends to be loose to support precious metal prices as a whole, but the marginal change of monetary policy suppresses precious metal prices more obviously. the recent rise in US bond yields and the weak operation of silver prices are directly related to market expectations that the Federal Reserve will reduce QE, which is also the biggest negative factor and risk factor of precious metal prices at present.
From a technical point of view, the recent strong rise in silver prices has begun to form the characteristics of high and low points moving upward, the moving average shows a long-term arrangement of gold forks upward, gold forks and other indicators such as MACD are upward, and the short-term rally is expected to continue.
All in all, while rising real interest rates depress precious metals prices, there is growing concern about inflation, and we believe that traditional safe havens such as silver, which are hedged against inflation, are still important allocation tools for investors.
