Gold prices have fallen back to the beginning of the month
On May 31st, gold prices fell back to the beginning of the month. According to the commodity market analysis system of the business community, the spot market price of gold will be 446.76 yuan/g on May 31, 2023, up 0.91% from the beginning of the month (May 1).
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Silver decreased by 4.22% compared to the beginning of the month
According to the commodity market analysis system of the business community, the average price of silver in the market will be 5347.67 yuan/kg on May 31, 2023, down 4.23% from the beginning of the month (May 1), and 8.42% from the high spot market price in the month (May 5). The low point in the past year occurred on July 18, 2022, and the current price has increased by 30.49% compared to the low point.
Summary of Price Trends of Precious Metals and Crude Oil
In the early stage, the correlation between precious metals and crude oil trends is strong. After the second half of 2022, precious metal prices have bottomed out and stabilized, and the magnitude of macro factors affecting them has begun to show differentiation. The trend of precious metals and crude oil began to converge in late March, but after mid April, the trend began to diverge again. Mainly due to the increased impact of risk aversion on the rise of precious metal prices.
Comparison of precious metal gold and silver price trends in the past year
In 2022, the rise and fall trends of precious metal gold and silver have converged, but the decline in silver was deeper from April to August, and the recent recovery has been more significant. In December, silver continued its strong trend last month, and gold began to consolidate at high levels. In 2023, precious metal gold and silver have consolidated at high levels, with a slight decline in February. Since March, precious metal prices have started to rise. Silver prices began to decline in May, while gold remained relatively strong.
Policy logic
The latest news shows that a principled agreement on the debt ceiling has been basically reached, and currently only legislative procedures have been completed before the deadline. The acceleration of US consumer spending has added obstacles to the path of inflation falling, and the expectation of another interest rate hike in June in the money market has significantly increased. Previously, the Federal Reserve had already laid the groundwork for a pause in interest rate hikes in June, and recent data significantly increased the difficulty of decision-making at the June FOMC meeting.
The annualized corrected value of the core PCE price index in the first quarter of the United States increased by 5% month on month, with an expected increase of 4.9% and an initial increase of 4.9% month on month; A year-on-year increase of 4.7%, with an initial value increase of 4.7%. The core price index slightly exceeded expectations, reflecting the strong inflationary stickiness of the US dollar, and the rebound trend of the US dollar index, suppressing precious metal prices in the short term.
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Fund logic
On May 30th, the trading volume of gold on the Shanghai Gold Exchange was 15332 kilograms, a decrease of 7.12% compared to the previous trading day. The trading volume of silver was 445420 kilograms, a decrease of 29.51% compared to the previous trading day. The gold inventory of the previous exchange was 2739 kilograms, unchanged from the previous trading day. Silver inventory decreased by 8884 kilograms to 1513534 kilograms compared to the previous trading day.
The newly announced gold SPDR ETF position was 939.56 tons, a decrease of 1.73 tons from the previous trading day. Silver SLV ETF position was 14554.35 tons, a decrease of 11.42 tons from the previous trading day
Narrowing Downward Space for Precious Metals in the Future Market
At the beginning of the month, the price of precious metals has reached a new decade high. In the early stage, we expected that under the high inflation and high interest rate hikes, the pace of overseas economic recession may lead to a relatively full sense of risk aversion, which is basically reflected in the price. Some central banks around the world increased their holdings of gold reserve, which also formed some support for gold prices.
However, the economic vitality demonstrated by domestic consumption during the May holiday, coupled with China’s first quarter economic data growth of 4.5%, partially alleviated concerns about global economic recession. Coupled with the Federal Reserve’s high interest rates and the expectation of the Federal Reserve stopping interest rate hikes in June, this has to some extent suppressed the prices of non bearing asset precious metals.
It is expected that the downward space for precious metal prices will narrow in the short term, with short-term fluctuations and consolidation being the main focus, while the medium to long term remains bullish.
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