April 11th SHFE Market: safe-haven demand leads Gold and Silver to rise sharply

On Monday, precious metals continued to strengthen, with Shanghai Gold rising 0.83% and Shanghai Silver up 1.5%. Although the Fed tightening expectations continue to rise, the dollar index continues to rise, but the situation in Russia and Ukraine continues to deteriorate, the safe haven value of precious metals can still be reflected. This week, in addition to continuing to follow the development of the situation in Russia and Ukraine, the United States will also release data such as CPI, PPI and retail sales in March. On Thursday, the ECB will announce interest rate decisions and ECB President Christine Lagarde will hold a press conference on monetary policy. The dollar index rose to 100 for the first time in nearly two years, supported by expectations that the Fed could tighten monetary policy further to contain soaring inflation. At one point, the dollar rose to 100.19, its highest level since May 2020. The dollar has risen strongly against a basket of six currencies over the past month, especially against the euro. Investors are worried about the economic cost of the war in Ukraine and possible tensions over the French presidential election, putting pressure on the euro. Minutes of the Fed's March meeting released last week showed that "many" policymakers were prepared to raise interest rates by 50 basis points in the coming months. Although the continued strength of the US dollar suppresses gold and silver to a certain extent, the safe-haven value of gold has been further reflected under the conflict between Russia and Ukraine, supporting the continuous rise of precious metals. Recently, the situation in Russia and Ukraine has deteriorated again, with Ukraine and its allies accusing Russia of carrying out a missile attack on a railway station in eastern Ukraine. Meanwhile, Ukrainian President Zelanski said on Saturday (April 9) that Ukraine was ready to fight an uphill battle with Russian troops massed in the east of the country, while British Prime Minister Johnson made a surprise visit to Kiev to provide new financial and military assistance. Huatai Futures believes that the US index rose above the 100 mark at one point, while US bond yields also rose. This is more affected by expectations that the Fed may further tighten monetary policy to curb soaring inflation. But in the process, gold prices showed a more resilient situation, Comex Golden week even recorded a rise of 1.14%, and gold ETF positions recorded a significant increase in March. All these show that at present, geopolitical uncertainty is still relatively prominent, and the market's concern about the occurrence of systemic credit risk is gradually increasing. At the same time, although the United States announced the sale of crude oil reserves, which once made inflation expectations lower, but as crude oil prices gradually stabilized last week, breakeven inflation rate once again recorded a rise in 7BP. Therefore, in the current situation, for precious metals, it is still recommended to adopt a step-by-step bargain-hunting strategy.