Gold Prices Approach $2,900! Precious Metals Sector "Soars" With Only a Small Amount of Just-in-Demand Spot Silver Transactions [SMM News Flash]

SMM February 5 News:
　　
According to CCTV News, on February 2 local time, US President Donald Trump stated that he plans to impose tariffs on EU products soon; he also remarked that "the UK has been somewhat excessive" on trade issues with the US, but he believes "the related issues can be resolved." On February 1, Trump signed an executive order to raise tariffs by 10% on goods imported from China. According to the order, the US will also impose a 25% tariff on goods imported from Mexico and Canada. On February 3, Trump announced on social media that the tariff measures against Canada would be delayed by 30 days to allow time for a final economic agreement. Additionally, the US has suspended the 25% tariff on Mexican goods, postponing its implementation to March 4, 2025. The US tariff threats have sparked market concerns, and under the dominance of risk-averse sentiment, precious metals have shown strong performance, with gold prices repeatedly hitting historical highs recently! Although market concerns over trade conflicts eased after the US delayed tariff hikes on Canada and Mexico, precious metals still exhibited impressive market performance as the US dollar continued to pull back. As of 15:16 on February 5, COMEX gold rose 0.26% to $2,883.3/oz, hitting a new historical high of $2,888.8/oz during the session; COMEX silver fell 0.51% to $32.855/oz; SHFE gold rose 3.35% to 670.64 yuan/g, reaching a new historical high of 671.12 yuan/g during the session; SHFE silver rose 4.84% to 8,107 yuan/kg.

In the stock market, the precious metals sector surged significantly. As of the close on February 5, the precious metals sector rose 5.63%. Among individual stocks, Chifeng Gold rose 8.45%, Yulong Co., and Xiaocheng Technology both rose over 7%, with Shandong Gold, Sichuan Gold, and Hunan Gold among the top gainers.

News Highlights

[State Council: Starting February 10 This Year, Tariffs Will Be Imposed on Certain US-Origin Imported Goods, Including Coal, Crude Oil, and Large-Displacement Vehicles] On February 4, the State Council Tariff Commission issued an announcement regarding the imposition of tariffs on certain US-origin imported goods. On February 1, 2025, the US government announced a 10% tariff on all Chinese exports to the US, citing issues such as fentanyl. The unilateral tariff hike by the US seriously violates WTO rules, does not help solve its own problems, and disrupts normal Sino-US economic and trade cooperation. With the approval of the State Council, starting February 10, 2025, tariffs will be imposed on certain US-origin imported goods. Details are as follows: 1. A 15% tariff will be imposed on coal and liquefied natural gas, with specific product ranges listed in Annex 1. 2. A 10% tariff will be imposed on crude oil, agricultural machinery, large-displacement vehicles, and pickup trucks, with specific product ranges listed in Annex 2. 3. For US-origin imported goods listed in the annexes, additional tariffs will be imposed on top of the current applicable tariff rates. Current bonded and tax exemption policies remain unchanged, and the additional tariffs will not be exempted.》Click to View Details

[US Announces 10% Tariff on Chinese Goods] On February 1, US President Trump signed an executive order to impose a 10% tariff on goods imported from China. This latest trade protection measure by the US has faced widespread opposition both internationally and domestically. The White House stated on the same day that the US will impose a 10% tariff on all goods imported from China on top of existing tariffs. Trump said this aligns with the "protectionist measures" he supports. (CCTV News)》Click to View Details

Two informed officials stated that the European Commission is considering using "anti-coercion tools" to address any potential trade disputes with the US, allowing it to impose restrictions on US service industries, including large tech companies. This tool, developed during Trump's first term, enables the EU executive body to impose restrictions on service trade.

European Commission President Ursula von der Leyen stated at the EU Ambassadors' Meeting on February 4 that the EU is prepared to engage in tough negotiations with the US if necessary while firmly safeguarding its own interests.

In response to US President Trump's statement about imposing tariffs on EU goods soon, several EU leaders responded on February 3. French President Emmanuel Macron stated that if the US imposes tariffs on EU goods, European countries will stand together to respond in their own interests. Danish Prime Minister Frederiksen also called for the EU to respond "collectively and forcefully." German Chancellor Olaf Scholz said that imposing tariffs benefits neither the US nor Europe and expressed hope for finding a cooperative path forward.

On February 3, US President Trump announced on social media that the tariff measures against Canada would be delayed by 30 days to allow time for a final economic agreement.

On February 3 local time, US President Trump signed an executive order to suspend the 25% tariff on Mexican goods, postponing its implementation to March 4, 2025.

On February 2 local time, US President Trump stated that he would discuss tariff issues with Canada and Mexico on February 3. Trump also mentioned plans to impose tariffs on EU products soon and remarked that "the UK has been somewhat excessive" on trade issues with the US, but he believes "the related issues can be resolved." It is reported that Trump said he would speak with Canadian Prime Minister Trudeau on the morning of February 3. (CCTV News)

On January 29 local time, the US Fed concluded its two-day monetary policy meeting and announced that it would maintain the federal funds rate target range at 4.25%-4.5%. This marks the first pause in rate cuts since the Fed began its rate-cutting cycle in September last year, aligning with widespread expectations. The market is focusing on US non-farm payroll data and other economic indicators for more guidance on the Fed's future policy path. Morgan Stanley economists stated that they no longer expect the Fed to cut rates in March and now anticipate a rate cut in June this year. The Trump administration's tariff imposition is proceeding faster than expected, which may mean that inflation will stagnate at a higher level, blocking the possibility of any near-term rate cuts.

After Silver Prices Surged, Only Limited Just-in-Time Procurement Was Seen Downstream

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Following a significant rise in overseas precious metals during the Chinese New Year holiday, domestic precious metals futures surged sharply after the holiday, with spot silver also posting considerable gains. On February 5, the ex-factory reference average price for SMM #1 silver in the morning was 8,045 yuan/kg, up 407 yuan/kg from the previous trading day, an increase of 5.33%.

According to SMM, after the holiday, although silver prices surged above 8,000 yuan/kg, many companies did not engage in significant stockpiling before the holiday. End-user companies with depleted inventories had to make just-in-time procurement in the spot market to complete production plans, resulting in limited just-in-time procurement transactions in the market.

Institutional Comments

Guotai Junan Futures stated that during the Chinese New Year holiday, precious metals remained strong, with gold hitting new historical highs. Concerns over economic growth and inflation pressure in the context of trade wars continue to support gold prices, as physical gold flows to the US. This week, attention will focus on non-farm payroll data and other indicators for guidance on rate cut prospects. After the holiday, domestic markets opened higher, and some bulls considered profit-taking.

Joy Yang, Global Head of Index Product Management at MarketVector, told Kitco News: "Although gold prices are at a historical high above $2,800, there is still room for growth due to persistent geopolitical uncertainties. This is not just about specific tariffs or whether tariffs will be imposed. At some point, there will be another unexpected event that the market is unprepared for." Yang added that the market simply does not know how to navigate this environment, making it reasonable for gold prices to remain above $2,800/oz. However, geopolitical uncertainties are not the only factors driving gold prices higher. Yang noted that after China launched a cheaper AI product, gold will become an important tool for portfolio diversification as investors continue to adapt to changing expectations in the tech sector. She expects central banks to continue increasing their gold exposure. While investor demand and speculative interest are expected to bring some volatility to the gold market, Yang stated that the overall trend remains upward. Despite gold's prominence as a safe-haven asset, Yang also sees potential in silver.

Citi believes that further tariff escalations will lead to bullish gold sentiment over the next 6-12 months, with gold prices rising to $3,000/oz. They are also bullish on silver, expecting it to rise to $36/oz, while bearish on copper prices, predicting a decline to $8,500/mt in the next three months.

Goldman Sachs maintains its forecast of $3,000/oz for gold prices in Q2 2026.

According to a survey of 26 analysts by the London Bullion Market Association, gold prices are expected to hover around current levels this year. The survey shows that the average gold price in 2025 will reach $2,737/oz. The most optimistic forecast comes from Keisuke Okui of Sumitomo Corporation, who predicts a price of $2,925.

Shawn Khunkhun, CEO of Canadian silver exploration and development company Dolly Varden Silver, recently expressed a bullish view on silver prices in an interview. He expects silver to "far outperform gold" by 2025. Having worked in the precious metals market for many years, Khunkhun believes his previously set target of $73 for silver prices is just the beginning.

A research report by CITIC Securities pointed out that based on its gold price analysis framework, it is optimistic about gold prices in 2025. Global central bank gold purchases are expected to continue, with the announcement effect of central bank gold purchases likely to become more pronounced. Global market enthusiasm for gold investment may persist, with a structural trend of "Asia down, Europe and the US up." Geopolitical conflicts in regions such as the Middle East and Russia-Ukraine may become more unstable in 2025, supporting gold price increases. In the medium term, cryptocurrencies and gold do not yet constitute competing options for safe-haven allocation. According to model predictions, under a neutral assumption, COMEX gold futures prices could exceed $3,100/oz by mid-2025.