Precious metal price trend
The silver market’s average early trading price on June 17 was 5,491.67 yuan/kg, which was 5,587.67 yuan/kg compared to the spot market price on the 16th; down 1.72%; compared with the early May (May 1) spot market price, the early trading average price was 5321.67 yuan Kg, an increase of 3.19%; compared with the beginning of the year (01.01) silver spot price of 5550 yuan / kg, a decrease of 1.05%.
On June 17, the spot price of gold was 375.90 yuan/g, down 0.94% on the 16th; compared with the early May (5.1) spot market price in early trading, the average price was 369 yuan/g, an increase of 1.87%; compared with the beginning of the year (01.01) gold spot price was 392.70 yuan /G, down 4.28%.
Federal Reserve news releases precious metal prices under pressure
The price of precious metals came under pressure on the 17th, mainly due to the influence of policy news. At 02:00 on June 17 (Thursday), the Federal Reserve announced that it would maintain the benchmark interest rate unchanged at 0%-0.25%, which was in line with market expectations. The Fed officials’interest rate hike path dot plot unexpectedly showed that the Fed will raise interest rates by the end of 2023. twice. In addition, according to reports, the Federal Reserve decided to increase the overnight reverse repurchase interest rate (ON RRP) by 5 basis points to 0.05% and the excess reserve interest rate (IOER) by 5 basis points to 0.15% from June 17. Affected by the news, the US dollar surged 0.97% overnight, reaching 91.408, the highest point since May 5 this year. The U.S. 10-year Treasury bond yield rose by 10 basis points, hitting 1.59%, the highest level since June 4. News factors supported the rebound of the US dollar index and suppressed the trend of precious metal prices.
Although, at the subsequent press conference, Fed Chairman Powell tried his best to appease the market:“There was no discussion on whether it is appropriate to raise interest rates in a particular year. The dot matrix chart does not predict the future interest rate trends well. It is too early to discuss interest rate hikes. Interest rate hike is not the focus of the meeting now. The interest rate hike will happen for a long time, and we are still far from the maximum employment goal.” However, from a financial point of view, gold medium and long-term allocation funds have returned slightly; silver ETFs begin Outflow.
Generally speaking, the trend of precious metals depends on the game between inflation expectations and liquidity tightening expectations under the economic recovery. The recent decline in nominal interest rates and inflation expectations at the same time corresponds to the market’s revision of the previously excessively high inflation expectations, and the tightening expectations released by the Fed’s FOMC meeting on the 17th, the interest rate side may form an expectation that nominal interest rates will rise and inflation expectations will fall. This is even more important for precious metals. It is disadvantageous, especially silver is disadvantageous.
In the near future, it is unlikely that real interest rates will continue to fall deeply, and the yields of superimposed U.S. dollars and U.S. Treasuries are also trending upward again, especially the U.S. Therefore, business analysts believe that gold is currently under upward pressure, while silver has more pricing influence factors due to its dual attributes of precious metals and industrial metals. Considering the medium and long-term industrial demand factors, in terms of physical consumption, the industrial demand for silver and platinum, driven by economic recovery, especially driven by the concept of green and renewable energy, has strong growth expectations, but in the short term it is still a precious metal factor. Leading prices, mainly under pressure.