Safe-Haven Sentiment Supports Precious Metals' Counter-Trend Rise; Pre-Holiday Restocking Demand Drives Increase in Spot Silver Transactions [SMM Newsflash]

SMM January 3 News:

On January 3, safe-haven sentiment supported precious metals futures and stocks, which both rose during the two trading days after the holiday. As of 14:50 on January 3, precious metals futures all rose, with COMEX gold continuing its upward trend from the previous two trading days, rising 0.19% to $2,674.2/oz; COMEX silver extended its previous day's gains, rising 0.45% to $30.035/oz; SHFE gold rose 0.87%, continuing its previous day's gains; SHFE silver rose 0.46%, continuing its two-day upward trend, to 7,632 yuan/kg.

In the stock market, although the broader market experienced significant adjustments, the precious metals sector rose during the two trading days after the holiday. As of the close of the daytime session on the 3rd, the precious metals sector rose 1.86%, with Xiaocheng Technology and Sichuan Gold rising over 6%, and Shandong Gold and Hunan Gold rising more than 4%.

Pre-holiday restocking demand increased spot silver transactions.

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In the spot market, spot silver on January 3 continued its slight upward trend from the previous day. According to SMM, the ex-factory reference average price of SMM 1# silver on the morning of January 3 was 7,607 yuan/kg, up 23 yuan/kg from the previous trading day, an increase of 0.3%. According to SMM, as the market cleared inventory before the holiday, there was restocking demand after the New Year holiday. Although silver prices continued to rise slightly after the holiday, pre-holiday restocking still boosted market transaction activity. For the outlook on precious metals, the market is currently focusing on data and statements affecting the US Fed's interest rate outlook, as well as the impact of US tariff policies on precious metals.

Institutional Comments

Jinyuan Futures Research Report stated: On the first day of 2025, US stocks experienced significant volatility, the US dollar rose over 1% to a more than two-year high, and precious metals strengthened due to safe-haven sentiment. Data released last night showed that the US December Markit Manufacturing PMI was 49.4, exceeding expectations, but optimism for the coming year declined. Last week, initial US jobless claims fell to 211,000, the lowest in nearly eight months. Meanwhile, continuing claims for unemployment benefits for the week ending December 21 also fell to a three-month low of 1.844 million. The four-week moving average dropped to 223,250, the lowest since late November, indicating that the US labour market remains resilient. Current safe-haven sentiment is driving gold and silver prices higher, and gold and silver are expected to continue rebounding in the short term. However, Jinyuan Futures remains cautious about the rebound's scope.

KCM Trade's Chief Market Analyst Tim Waterer stated: "We are seeing increased safe-haven demand, which is supporting gold prices."

Mind Money's CEO Julia Khandoshko stated: Global trends will continue to play a key role and influence the subsequent gold market trajectory. This year, gold prices are expected to gradually rise and steadily appreciate throughout the year.

JPMorgan stated that although international gold prices may fluctuate in the short term due to reduced expectations of US interest rate cuts, the structural bull market remains intact in the long term. International gold prices are expected to reach $3,000/oz by the end of 2025.

Goldman Sachs noted in its research report that the structural drivers of international gold prices remain robust in 2025. Due to central bank purchases and US interest rate cuts, international gold prices are expected to rise to a record $3,000/oz.

CITIC Securities pointed out that global central bank gold purchases are likely to continue, with the demonstration effect of central banks announcing gold purchases becoming more pronounced. Global market enthusiasm for gold investment may persist, structurally characterized by "Asia down, Europe and the US up." Geopolitical conflicts in the Middle East, Russia, and Ukraine may become more unstable in 2025, favoring gold price increases. In the medium term, cryptocurrencies and gold do not yet constitute competing options for safe-haven allocation. According to CITIC Securities' model predictions, under a neutral assumption, COMEX gold futures prices could exceed $3,100/oz by mid-2025.

The World Gold Council report noted that gold prices are on track to achieve their best annual performance in over a decade, having risen 28% as of November. This was driven by central bank and investor purchases offsetting a significant slowdown in consumer demand. Looking ahead, all eyes are on the impact of Trump's second term on the global economy. Current expectations for GDP, yields, and inflation suggest that gold will see positive but much milder growth in 2025. The upside could benefit from significantly lower interest rates, increased volatility, or sustained above-average central bank gold demand. Conversely, higher long-term interest rates or weak gold consumer demand could pose headwinds.

IMF data shows that in October 2024, India increased its gold reserves by 14.147 mt to 867.807 mt. Poland's gold reserves increased by 21.050 mt in November 2024, reaching 448.246 mt. Kazakhstan's gold reserves increased by 5.067 mt in November 2024, reaching 295.225 mt.

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