The high price of precious metals in June was sideways, rising first and then falling later within the month
| Thiourea |
In June, the price of precious metals was at a high level, with a trend of first rising and then falling during the month. According to the commodity market analysis system of the business community, the price of gold in the Spot market will be 448.60 yuan/g on June 30, 2023, down 0.24% from 449.70 yuan/g in the Spot market at the beginning of the month (June 1); Compared to the high of 452.34 yuan/g on June 13th, it decreased by 0.83%.
Silver fell back to the beginning of the month
According to the commodity market analysis system of the business community, the average silver market price will be 5432.33 yuan/kg on June 30, 2023, down 0.25% from 5446 yuan/kg at the beginning of the month (June 1); Compared to the high point of the month (June 13th) of 5647 yuan/kg, it decreased by 3.80%.
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. In June, gold prices reached a high level and silver prices began to rise.
Policy Fundamentals Data
The US GDP growth rate in the first quarter has significantly increased to 2%, forcing the market to suggest to the Federal Reserve a target pricing of raising interest rates twice this year. As of this morning, the market has priced the Federal Reserve to raise interest rates by at most about 35 basis points this year, compared to around 30 basis points yesterday. In addition, the core PCE price index in the United States recorded an annualized quarterly rate of 4.9% in the first quarter, better than the expected 5.00%. Last week, the number of initial claims for unemployment benefits in the United States hit its largest decline since October 2021. The monthly rate of the US completed home contract sales index for May was -2.7%, lower than the expected -0.50%. The economic data improved again, boosting the U.S. Dollar Index, making the market believe that the probability of the Federal Reserve raising interest rates is further enhanced, to a certain extent, precious metals. However, based on recent statements from Federal Reserve officials, Federal Reserve Chairman Powell stated that continuing to slow down is meaningful and does not rule out the possibility of continuous interest rate hikes. The risk of doing too much is smaller than doing too little. Next year’s FOMC voting committee and Atlanta Federal Reserve Chairman Bostek stated on Thursday that the need for further interest rate hikes in the coming months is not absolutely ruled out, and there is a possibility of two consecutive interest rate hikes, without seeing the urgency of interest rate hikes as seen by Powell. The baseline is that there will be no further interest rate hikes, but there will be no interest rate cuts in 2024.
The high price of precious metals has fallen, and the probability of sideways fluctuations in precious metal prices in July is high
At present, the price of precious metals has been fluctuating in the high range after hitting a 10-year high in the early stage. 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 strong sense of risk aversion, which is currently reflected in prices. Some central banks around the world increased their holdings of Gold reserve, which also formed some support for gold prices.
However, Federal Reserve officials downplayed the possibility of interest rate cuts within the year, suggesting that there are still two expected rate hikes within the year, which will suppress precious metal prices for a certain period of time. At present, the price of precious metals is at a high level, and the probability of entering a sideways market fluctuation is increasing. It is expected that the price fluctuation of precious metals in July will be mainly weak and consolidation will continue to be bullish in the medium to long term.
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