According to the data of Business News Agency, the spot market price of gold on March 8, 2023 was 413.48 yuan/g, down 1.95% from the beginning of the month (March 1), and up 0.88% from the early average spot market price of 409.89 yuan/g at the beginning of the year (January 1).
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According to the data of Business News Agency, the average price of silver market on March 8, 2023 was 4742.33 yuan/kg, down 4.06% per day, down 2.49% from the beginning of the month (March 1), and down 11.28% from the average price of spot market at the beginning of the year (January 1), 5345 yuan/kg; Compared with the early average spot market price of 4368.33 yuan/kg at the beginning of October 2022 (October 1), an increase of 8.56%.
Price trend of precious metals and crude oil
Comparison of precious metal gold and silver price trends in the past year
In 2022, the rise and fall trend of precious metal gold and silver will converge, but in April and August, silver will fall deeper, and the recent recovery will be more obvious. In December, silver will continue the strong market of last month, and gold will start to consolidate at a high level. In 2023, the precious metal gold and silver will consolidate at high levels, and fall slightly in February.
Expectations of interest rate increase disturb the short-term pressure of precious metals
Federal Reserve Chairman Powell’s semi-annual monetary policy testimony in the Senate continued to release hawkish signals, and the expectation of raising interest rates by 50BP in March was significantly higher. According to the CME Federal Reserve observation data, the market expects the probability of the Federal Reserve raising interest rates by 25BP in March to drop sharply to 29.5%, while the probability of raising interest rates by 50BP has soared to 70.5%; The probability of raising interest rate by 25BP in May is 60.3%, and the probability of raising interest rate by 50BP is 18.6%; The probability of a 25BP interest rate increase in June is 56%, and the probability of no interest rate increase is 25.9%. The peak of the mainstream expected interest rate will move up to 5.5% – 5.75%.
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The strengthening of the expectation of interest rate increase in the short term and the upward shift of the peak of the mainstream expected interest rate, to a certain extent, suppress the price of the precious metal market, and also affect the change of the trading volume in the investment market to a certain extent.
Decrease in ETF positions
On March 7, SPDR gold ETF position continued to decrease by 5.5 tons to 906.62 tons; IShares silver ETF position decreased by 14.3 tons to 14857.64 tons.
Don’t be too bearish in the future
However, in the medium and long term, the position of precious metal ETF showed a rebound trend. The central banks of all countries have also been on the way of net purchase of gold. At home, China’s foreign exchange reserves at the end of February were $3133.15 billion, a decrease of $51.312 billion on a month-on-month basis. At the end of February, the gold reserve was at 65.92 million ounces (about 2050.34 tons), an increase of 800000 ounces (about 24.88 tons) on a month-on-month basis, marking the fourth consecutive month of increasing gold holdings.
Precious metals are more sensitive to macro policy factors due to their strong monetary attributes. In the short term, the price of precious metals is still subject to tightening expectations and economic recession concerns. However, in the medium and long term, the process of interest rate increase of the Federal Reserve and central banks is facing a slowdown, and the leading impact of interest rate increase expectation on gold price will be weakened; The impact of economic data will increase significantly and become the leading factor. In addition, the international geopolitical risk events constitute the support of gold price, and some of the international hedging funds seek the gold hedging function, so in the medium and long term, the precious metal bulls still have the strength of the game, and in the short term, it is expected that the interest rate increase will prevail, and the price of precious metals will be mainly stable and weak.
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