Precious metal futures and stocks performed "notably well" this week, while spot silver trading was relatively sluggish. How do major institutions view the market outlook? [SMM Commentary]

SMM May 23 News:

On May 23, driven by heightened market concerns over the deteriorating fiscal outlook in the US, a weaker US dollar, and ongoing unrest in the Middle East, risk-averse sentiment surged in the market, leading to a collective rally in precious metals futures and stocks. In the futures market: As of 16:15 on May 23, COMEX gold rose by 1.01%, closing at $3,328.4 per ounce; COMEX silver increased by 0.7%, closing at $33.45 per ounce; SHFE gold rose by 0.1%, while SHFE silver fell by 0.37%, and silver T+D declined by 0.39%. In the stock market: On the 23rd, amidst a nearly 1% decline in the broader market, the precious metals sector bucked the trend and strengthened, ultimately leading the gains across all industries with a 1.96% increase.

It is worth noting that precious metals futures and stocks have generally performed well this week. As of around 17:09 on May 23, COMEX gold had temporarily risen by 4.37% week-on-week, poised to record its largest single-week gain in over a month; COMEX silver had temporarily increased by 3.16% week-on-week; SHFE gold had risen by 3.76% week-on-week, SHFE silver had risen by 1.95% week-on-week; and the precious metals index had risen by 6.96% week-on-week.

News Updates

The Shanghai Gold Exchange (SGE) issued a notice on May 23 regarding market risk control during the 2025 Dragon Boat Festival holiday. The notice stated: In accordance with the holiday schedule for the Dragon Boat Festival, our exchange will be closed from May 31 (Saturday) to June 2 (Monday). There will be no night trading session on the evening of May 30 (Friday), and trading will resume as usual on June 3 (Tuesday). To guard against fluctuations in gold and silver prices in the international market during the holiday, in accordance with the relevant provisions of the "Shanghai Gold Exchange Risk Control Management Measures", our exchange will adjust the margin ratios and price limits for gold and silver deferred contracts. The relevant matters are hereby notified as follows: 1. Starting from the settlement and clearing at the close of trading on Tuesday, May 27, 2025, the margin ratios for contracts such as Au(T+D), mAu(T+D), Au(T+N1), Au(T+N2), NYAuTN06, and NYAuTN12 will be adjusted from 13% to 14%, and the price limits for the next trading day will be adjusted from 12% to 13%; the margin ratio for the Ag(T+D) contract will be adjusted from 16% to 17%, and the price limit for the next trading day will be adjusted from 15% to 16%. If a one-sided market occurs on May 27, and the adjusted margin and price limit levels, in accordance with the relevant provisions of the "Shanghai Gold Exchange Risk Control Management Measures", are higher than the aforementioned standards, the higher standards shall apply. 2. After trading resumes on Tuesday, June 3, 2025, starting from the settlement and clearing at the close of the first trading day without a one-sided market, the margin ratios for contracts such as Au(T+D), mAu(T+D), Au(T+N1), Au(T+N2), NYAuTN06, and NYAuTN12 will revert to 13%, and the price limits for the next trading day will revert to 12%; the margin ratio for the Ag(T+D) contract will revert to 16%, and the price limit for the next trading day will revert to 15%. All members are requested to enhance their awareness of risk prevention, meticulously formulate and implement risk emergency response plans, and remind investors to take measures for risk prevention, reasonably control their positions, invest rationally, and ensure the stable and healthy operation of the market.

After last-minute amendments before the vote, the landmark tax cut bill proposed during Trump's 2.0 term finally narrowly passed the US House of Representatives, being sent to the Senate with a slim margin of just one more vote in favor than against. Market observers are concerned that the measures in the bill may widen the US government's budget deficit, putting greater pressure on the US bond market. (Wall Street CN)

On May 23, Bank of America Global Research stated in a report that the gold market experienced a net outflow of $2.9 billion in the week ending Wednesday, marking the largest weekly outflow since April 2013 and the third-largest on record.

Data released by the US Department of Labor on Thursday showed that the number of Americans filing for unemployment benefits for the first time in the week ending May 17 was 227,000, lower than the market expectation of 230,000 and the previous week's 229,000. The number of continuing unemployment claims for the week ending May 10 was 1.903 million, higher than the market expectation of 1.885 million and the previous week's 1.881 million. The number of initial jobless claims in the US fell by 2,000 to a four-week low last week, indicating that despite uncertainties brought about by trade policies, the labor market remains healthy. However, the number of continuing claims rose, suggesting that it is becoming increasingly difficult for the unemployed to find new jobs.

Spot silver prices rose by 1.55% this week, with high spot premiums making actual transactions relatively difficult.

》Click to view SMM precious metal spot prices

》Subscribe to view historical price trends of SMM metal spot prices

In the spot market: On May 23, the morning reference average ex-factory price of SMM1# silver was 8,215 yuan/kg, down 54 yuan/kg or 0.65% from the previous trading day. Compared with 8,090 yuan/kg on May 16 (last Friday), the average price of 8,215 yuan/kg represents an increase of 125 yuan/kg, with a weekly gain of 1.55%.

It is reported that macroeconomic bullish factors boosted silver prices this week, with spot premiums offered by suppliers experiencing a slight decline towards the end of the week. Both supply and demand in the domestic spot market declined. Some smelters suspended domestic spot quotes during the week due to reasons such as prioritizing export demand. In the Shanghai area, tonne-scale national standard spot silver ingots available for self pick-up were quoted at a premium of 3-5 yuan/kg over TD, while spot silver ingots from large smelters were quoted at a premium of +5 to +8 yuan/kg over TD. Actual transactions at high spot premiums were relatively difficult this week. In addition, the operating rate of silver nitrate production declined in late May, with downstream purchases mainly focused on long-term contract cargo pick-ups and a significant decrease in spot order purchasing enthusiasm compared to April.

Voices from All Sides

[Is the Gold Bull Market Just Beginning? Analysts Say Historical Experience Suggests Prices Could Reach $4,500]Jordan Roy-Byrne, a technical analyst and editor of *The Daily Gold*, pointed out that gold prices broke out of a 13-year cup-and-handle formation in March last year, marking a significant technical confirmation. Now, the driving factors of the macroeconomic situation are also converging, with the market witnessing rising US Treasury yields, the bond market entering a prolonged bear market, and a collapse in credit quality. He emphasized that similar macroeconomic backgrounds and technical conditions were present during the early stages of the gold bull markets in 1930, 1972, and 2002. Additionally, gold prices have surpassed the S&P 500 Index and the 60/40 portfolio, and inflation-adjusted gold prices have just broken above a 45-year bottom. Roy-Byrne stated that it is entirely possible for gold prices to reach $3,700 by the end of the year, and historical experience suggests that gold prices will reach $4,400 to $4,500 within the next 12 months. Furthermore, silver prices are also expected to break above $100.》Click for details

A research report from Guosen Futures pointed out: On the news front, the preliminary US S&P Global Manufacturing PMI and Services PMI for May both rose to 52.3, better than expected and the previous values. Enterprises accelerated stockpiling due to tariff risks, pushing up the data. However, supply chain delays and soaring input costs exacerbated inflation stickiness, potentially strengthening market expectations that the US Fed will maintain interest rates unchanged, thereby suppressing precious metals in the short term. Coupled with the advancement of Trump's tax reform bill and the escalating risk of conflict between Iran and Israel, precious metals may continue to oscillate between the logic of policy tightening and stagflation hedging, with short-term technicals likely to remain volatile. In the medium and long-term, global central bank gold purchases and recurring geopolitical tensions are expected to consolidate the allocation value of precious metals.

Regarding the trend of precious metals, SDIC Futures believes that the preliminary US S&P Global Manufacturing PMI and Services PMI for May both recorded 52.3, better than expected and the previous values, and the number of weekly initial jobless claims fell to a four-week low of 227,000, indicating economic resilience and a pullback in precious metals. Recently, all parties involved in the trade war and geopolitical conflicts are in the negotiation phase, and market sentiment will continue to fluctuate. The adjustment in international gold prices is far from over, but they have shown resilience above the strong support level of $3,000 per ounce.

The Chief Investment Office (CIO) of UBS Wealth Management stated in an institutional view in early May that the US dollar has recently been oversold and is expected to consolidate for a period in the short term. In the medium term, the trend of US dollar weakness may re-emerge, while gold prices should be well supported by "safe-haven" demand and structural buying.

Goldman Sachs reiterated its structurally bullish view on gold, with a base case forecast of $3,700 per ounce by the end of the year and $4,000 by mid-2026.

The World Gold Council's press conference for the Global Gold Demand Trends Report for Q1 2025 was held on April 30. It was learned from the conference that demand for gold ETFs in the Chinese market surged simultaneously, with inflows of approximately 16.7 billion yuan (about $2.3 billion, equivalent to 23 mt) in Q1, reaching a record high. The soaring gold prices and unprecedented inflows propelled both the total assets under management (AUM) and total open interest of gold ETFs to break historical records, reaching highs of 101 billion yuan (about $13.9 billion) and 138 mt, respectively. According to statistics, the total gold consumption demand in the Chinese market in Q1 (including gold bars, coins, and jewelry) was 249 mt, down 15% YoY, primarily due to weak demand for gold jewelry.

In addition to bullish views on gold, however, some market participants also anticipate a decline in gold prices.

Vitaly Nesis, CEO of Solidcore, Kazakhstan's second-largest gold mining company, stated on April 25 that the company plans to produce approximately 15 mt of gold annually in Kazakhstan in 2025 and 2026. Gold has risen nearly 26% year-to-date due to concerns about an economic recession triggered by US tariffs. Nesis expects gold prices to fall in the coming year. He said, "I anticipate gold prices will fall to $2,500 within 12 months. Gold prices will not return to the $1,800-$1,900 level. The premium relative to fundamental levels will persist. However, the current situation is an overreaction to what is happening in the world."

Recommended Reading:

》Silver Bottoms Out and Rebounds, Market Focuses on Inflation and Geopolitical Risk Aversion [SMM Weekly Review of Silver Market]