"'Soaring Like Crazy': Gold Futures Hit Record Highs Repeatedly! Precious Metals Sector Leads the Gains, Chifeng Gold Among Top Gainers [SMM Newsflash]"

SMM March 18 News:

The uncertainty of US tariff policies, coupled with the intense backlash in global trade policies, has heightened market concerns about the prospects for global economic growth, becoming a key driver for gold prices repeatedly hitting record highs recently. As the risk of US economic "stagflation" increases, market expectations for more US Fed interest rate cuts have risen, and this monetary easing expectation has also supported gold prices. On March 18, precious metal futures and stocks surged again. As of 18:45 on March 18, COMEX gold rose 0.83% to $3,031.1/oz, hitting a record high of $3,037.6/oz during the session; COMEX silver rose 1.22% to $34.725/oz; SHFE gold rose 0.81% to 700.7 yuan/g, hitting a record high of 701.26 yuan/g during the session; SHFE silver rose 0.34% to 8,350 yuan/kg.

In the stock market: The precious metals sector strengthened. As of the close of the daytime session on March 18, the precious metals sector led all sectors with a 3.67% increase. Among individual stocks, Chifeng Gold and Yulong Co. both rose over 7%, while Xiaocheng Technology, Zhongjin Gold, and Shandong Gold were among the top gainers.

News

The Organization for Economic Cooperation and Development (OECD) downgraded its global economic growth outlook due to trade tensions, citing intensified inflationary pressures. It forecasts global economic growth of 3.1% in 2025 and 3.0% in 2026, down by 0.2 and 0.3 percentage points, respectively, from its December forecast. The OECD lowered its US growth forecast for 2025 from 2.4% to 2.2% and for 2026 from 2.1% to 1.6%.

The market is focusing on the US Fed's policy decisions to assess the US economic outlook. The latest economic forecasts to be released by Fed officials this week will provide the clearest evidence yet of how they view the potential impacts of US policies, which have cast a shadow over previously robust economic prospects. Major forecasters have lowered their expectations for US economic growth this year, increased the risk of recession, and predicted that inflation will rise as the US imposes a new round of hefty tariffs on imported goods, which will ripple through global markets. Institutions expect the Fed to maintain the federal funds rate at 4.25%-4.5%. Morgan Stanley believes that the future direction of monetary policy will depend on policy choices yet to be made and their combined effects, so the Fed is unlikely to act hastily.

High Silver Prices Spur Downstream Buyers to Buy the Dip

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On March 18, the SMM #1 silver ex-factory reference average price in the morning was 8,331 yuan/kg, up 17 yuan/kg from the previous trading day, an increase of 0.2%. According to SMM, today's cash spot national standard silver ingots in the Shanghai area were quoted at discounts of 3 yuan/kg to 1 yuan/kg against TD or at discounts of 20 yuan/kg against the SHFE silver 2506 contract and 2 yuan/kg against the SHFE silver 2504 contract. Overnight silver prices briefly fell, and buyers bought the dip on a point-price basis. After silver prices rose in the morning session, market transactions turned sluggish. Premiums and discounts for large silver ingots remained near parity, with Yuguang and Wanyang brand silver in the Shanghai area quoted at premiums of 2-3 yuan/mt against TD, but transactions were limited. With silver prices fluctuating at high levels, downstream buyers bought the dip as needed, while some suppliers paused quotations after March deliveries, reducing market circulation.

Market Commentary

UBS has become the latest institution to raise its gold price outlook, citing the increasing likelihood of a prolonged global trade war. Analysts expect this situation to continue driving investors to purchase gold as a safe-haven asset. UBS analysts Wayne Gordon and Giovanni Staunovo stated in a report on Monday that as trade conflicts escalate, gold's role as a store of value during uncertain times is becoming more prominent. They forecast that gold prices will reach $3,200/oz over the next four quarters, up from the bank's previous forecast of $3,000/oz.

A research report by China Securities stated that the sharp rise in gold prices at the beginning of the year was driven by tariff expectations catalyzing risks in New York spot delivery. In the short term, before tariff clarity, volatility in the futures-spot premium may not fully stabilize, and cross-market arbitrage may continue to support gold prices. In the medium term, since 2022, gold prices have deviated from the two traditional frameworks of the US dollar and real interest rates. Especially in 2024, the traditional gold framework has clearly failed. Returning to the simple supply and demand logic, two key demand drivers are crucial for gold price increases in 2024, aligning with the global macro situation. First, central bank gold purchases remain strong, which has been the underlying reason for the elevated gold price center since 2022. The underlying clue is major power rivalry, with geopolitical conflicts as the annotation. Second, the expansion of private sector gold investment demand in Asia, especially China. The underlying clue is the effective demand in China in 2024. Looking ahead to 2025, the demand factors driving gold prices in 2024 are expected to weaken in 2025. Therefore, we judge that 2024 will be a "tailwind period on a high platform" for gold prices, while 2025 may see gold prices transition from a tailwind period to a consolidation period.

Goldman Sachs believes that its baseline forecast of $3,100/oz for gold prices by the end of 2025 carries upside risks, and its forecast range of $3,100-$3,300/oz also has upside potential.

Analysts at Macquarie Group stated that gold's safe-haven status could push prices to a record high of $3,500/oz in Q3. Analysts Marcus Garvey and others noted in a report that during this period, the average gold price could be around $3,150/oz. Gold prices hovered near $2,940/oz on Thursday, and analysts expect concerns about a potential increase in the US deficit to provide further support for gold prices. Macquarie stated that if the US budget outlook deteriorates, it would signal potential inflation increases, benefiting gold as a safe-haven tool. "The reason we believe gold prices have strengthened so far and will continue to rise is mainly because investors and official institutions are more willing to pay for gold, which carries no credit or counterparty risk," analysts said.

David Wilson, Senior Commodity Strategist at BNP Paribas, stated in a report to clients on March 12 that the company expects gold prices to break above $3,000/oz for the first time in history and eventually reach $3,100/oz in the coming months.

Bank of America expressed optimism about copper and silver prices, forecasting that copper prices will reach $12,000/mt by 2027 and silver prices will reach $41.5/oz by 2026.

A research report by CITIC Securities stated that currently, they believe consumer expectations for continued gold price increases are forming, and purchasing psychology and behavior for gold jewelry are changing, with the investment attributes of gold jewelry strengthening. From a brand perspective, brands with a high proportion of investment gold, strong design and brand power, and still in the early stages of store expansion may perform well. Additionally, attention should be paid to incremental contributions from online and overseas businesses.

For more macro and fundamental news affecting precious metal markets, we welcome you to participate in the 2025 SMM (6th) Silver Industry Chain Innovation Conference~