COMEX gold hit a new high, and the gold price of jewelry was nearly 720 yuan! Silver prices are high, downstream procurement is weak [SMM hot discussion]
SMM, April 7: Geopolitical risks brought about by the rise in hedging demand, many central banks to buy gold and other factors make the international gold price ignore a number of Federal Reserve officials "hawks", after a brief adjustment on April 4, after the United States released the non-farm payrolls report on April 5, COMEX gold although the intraday short-term turn down, but as the dollar rally fell, COMEX gold rose sharply and hit a new high!
As of the close of the overnight market on the 5th, COMEX gold was reported at $2349.1 / ounce, up 1.76%, COMEX gold refreshed its all-time high at $2350 / ounce, and COMEX silver was reported at $27.6 / ounce, up 1.3%. As of 04:55 on April 6, London gold spot closed up 1.63% at $2,328.14 per ounce, and once again refreshed its all-time high to $2,330.36 per ounce. Spot silver in London closed up 2.01% at $27.43 an ounce.
Looking back at the performance as of April 3, it can be seen that Shanghai gold reported 541.52 yuan / gram, up 1.87%, and refreshed a record high of 541.8 yuan / gram during the session, and Shanghai silver reported 6791 yuan / kg, up 4.9%, a new high since August 2020. In addition, with the frequent refreshment of gold prices, the domestic gold price of jewelry has also risen to nearly 720 yuan / gram.
Citi raised its 0-3 month price targets for gold and silver to $2,400 and $28, respectively. Of course, when Citigroup and many other institutions raised the target price of international gold prices to $3,000 per ounce, many institutions also warned of the risk of gold market volatility or intensification. The downstream industrial production demand of silver spot, which was boosted by investment and safe-haven demand, was suppressed to varying degrees due to the high price of silver.
Message plane
According to the non-farm payrolls report released by the U.S. Bureau of Labor on April 5, the number of non-farm payrolls in the United States increased by 303,000 in March, the largest increase since May 2023, with an estimated increase of 214,000 and a revised increase of 275,000 to 270,000 in the previous value. In the first two months of this year, inflation data in the United States also continued to be higher than expected. The hawkish voices within the Fed also seem to be getting louder. Minneapolis Fed President Kashikari recently said that there is no need for the Fed to cut interest rates when the U.S. economy is doing so well. Fed Governor Bowman expressed a more aggressive view on Friday. She said that if U.S. inflation remains above the Fed's long-term target of 2%, it may be necessary to raise interest rates further this year, rather than cut them. Former U.S. Treasury Secretary Summers said the surge in non-farm payrolls in March showed that the Fed's estimate of the level of the neutral rate was very inaccurate and that no interest rate cuts should be taken in June. He noted that the strong jobs report suggests that the economy is re-accelerating, and that the neutral rate is well above what the Fed thought it would be, given the "epic" easing of financial conditions and a number of other factors. "I don't want to prescribe a prescription for monetary policy in June, but based on current facts and trends, I don't think it's appropriate to cut rates at that meeting," Summers said. "I think it's better to keep rates on the same for a much longer period of time than the dot plot suggests, and while the next rate adjustment is likely to be downwards and should be, the likelihood of a rate hike is also real," Summers said. After the release of the March non-farm payrolls report, the swap market lowered its expectations for a rate cut in 2024, delaying the Fed's first rate cut, which was fully digested, from July to September.
Many central banks, including central banks, continued to increase their holdings of gold. China's gold reserves were 72.58 million ounces at the end of February, compared with 72.19 million ounces at the end of January, the 16th consecutive month of increasing gold reserves, central bank data showed. In addition, the World Gold Council said the central bank, led by India, increased its gold reserves for the ninth consecutive month in February. The central bank's net purchases in February were 19t, with the Reserve Bank of India (RBI) and the Central Bank of Kazakhstan (Kazakhstan) adding 6t each. Spot gold prices have surged recently, hitting an all-time high of $2,288.40 an ounce on Wednesday. Thanks to long-term tailwinds such as central bank purchases, gold prices were already at record highs until March.
According to Chow Tai Fook's official website, on April 7, the retail gold price of Chow Tai Fook pure gold (jewelry, handicrafts) was 718 yuan/gram. In addition, according to the first financial news on April 6, the price of the Lukfook pure gold necklace is 718 yuan / gram, and said that the labor cost is extra, Zhou Shengsheng, Lao Miao Gold, Lao Fengxiang, Chao Hongji's pure gold jewelry on April 6 The retail listing price has also soared to 719 yuan / gram, 717 yuan / gram, 717 yuan / gram, 718 / gram respectively.
At the time of the rise in gold prices, according to the Securities Times: Recently, many gold jewelry wholesalers have gathered in Zhaoyuan, Shandong. In terminal sales stores, buyers are particularly cautious about buying gold jewelry. In terms of choosing styles, the choice of buyers has changed from traditional crafts to fashion jewelry with national tide culture as elements. The repurchase of large quantities of gold raw materials offline has also become a highlight, and many large gold hoarders choose to sell at the high price of gold. While the offline repurchase of gold raw materials is hot, many gold stores have opened an online repurchase mode.
Data from the U.S. Commodity Futures Trading Commission (CFTC) showed that speculators' net long position in COMEX gold increased by 20,493 contracts to 178,213 contracts in the week of April 2.
According to the Interfax news agency, Russia may temporarily impose additional taxes on gold.
The Perth Mint said on Friday that sales of gold products fell to their lowest level in nearly five years in March, as consumer demand fell due to higher gold prices. Data released by the Perth Mint showed that coin and bar sales fell 65% in March from the previous month to 16,442oz, the lowest level since May 2019. Sales in March were down nearly 80% from a year earlier. Silver product sales were 860,672 ounces, down 15% sequentially and 53% year-on-year. The Perth Mint's Neil Vance said the drop in gold demand in March was in line with continued weakness in global gold product sales as customers reacted to higher prices for precious metals investment products.
1# silver rose nearly 10% in March, and the high price of silver suppressed the demand of its downstream industries
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In terms of the silver spot market, the spot price of silver, driven by macro, risk aversion, investment demand, and soaring gold prices, has also soared recently, with the average price of SMM1# silver rising by 9.87% in March. And into April, April 1 silver prices continued to rise, April 2 morning silver prices have a slight pullback, the downstream market began to part of the stock procurement, because the absolute price is still in a relatively high position, so the market procurement is also based on rigid demand and pending orders, the transaction situation has improved compared with the previous two weeks, with the sharp increase in silver prices on Wednesday, the sentiment of market procurement and sales has weakened. According to SMM, the downstream industrial production demand has been suppressed to varying degrees due to the high price of silver.
In terms of photovoltaic demand: this week, photovoltaic downstream enterprises have been affected by the sharp rise in silver prices, mainly wait-and-see and rigid demand, the market maintains rigid demand supply through long orders and inventories, and the downstream procurement sentiment is weak.
Jewelry and other downstream demand: silver other downstream due to the impact of high silver prices, jewelry industry demand has been significantly suppressed, and other downstream use of silver is mainly based on the conductivity of silver, so there are other base metal substitution, due to the higher price of silver, the market's acceptance of silver has weakened significantly, to just demand and other base metal substitution, so other downstream orders this week are also poor.
Institutional sounds
Wall Street's optimism for the market next week outweighed the unbeatable optimism of retail investors, according to the latest Kitco News Weekly gold survey, as greater concerns about geopolitical turmoil drowned out fears of a pullback in gold prices from the latest new highs. This week, 12 Wall Street analysts participated in the Kitco News gold survey, and their reactions showed that the bullish sentiment completely captured the imagination of institutions. Nine experts (75%) expect gold prices to climb further next week, while only one analyst (8%) predicts a decline. The remaining two experts (17%) say that both long and short factors exist and cannot predict the next week's trend. Meanwhile, Kitco's online survey cast 240 votes, with 75% of retail investors expecting further gains or volatility in gold prices. 159 retail traders (65%) expect gold prices to rise next week. Another 41 (17%) predict a decline in gold prices, while 40 respondents (17%) are neutral on gold's near-term outlook.
Pavilonis said there was no sell-off in the market despite a steady stream of hawkish rhetoric from multiple Fed officials this week. "Now add to that some of the geopolitical issues that are taking place in the Middle East that have the potential to escalate, and in this case, this is bullish for gold in the short term. If nothing happens over the weekend, he thinks commodities could see a pullback early next week. "If there's nothing, energy prices go down, and then you might see gold take a little breather," he said. I think gold could come back to a decent round number, say $2,000. ”
According to Citi, we raise our 0-3 month price targets for gold and silver by 9% and 16% to $2,400 and $28 per ounce, respectively, and raise the upper limit of our 6-12 month bullish scenario targets for gold and silver to $3,000 and $32 per ounce, respectively, and in the bullish scenario, we believe that the probability of gold reaching an average price of nearly $2,500 per ounce in the second half of the year and an average price of $30 per ounce for silver increases.
Sugandha Sachdeva, founder of SS WealthStreet, said: "Despite the strength of the US dollar, gold prices have been rising for three consecutive weeks. The key factors driving the strength of gold prices are increased bets on the Federal Reserve to ease monetary policy and the deteriorating geopolitical situation in the Middle East. Another official factor that has boosted gold and silver prices has been China's buying spree in recent weeks. Continued central bank buying and uncertainty ahead of this year's major economic elections have also strengthened gold's appeal as a safe-haven tool. In addition, the depreciation of the Indian rupee also supported the country's domestic gold price. Commenting on the Fed's easing of monetary policy, it said: "Although Fed officials have sent different signals about rate cuts this week, market sentiment is leaning towards the expectation of a rate cut in June as price pressures in the US economy are receding." ”
Wang Qing, chief macro analyst of Oriental Jincheng, believes that there are three reasons why the international gold price denominated in US dollars continues to rise: first, it is currently in the stage of the Fed's interest rate cut, and the increase in gold demand is a normal market reaction; Third, since the Spring Festival this year, the enthusiasm of domestic people to buy gold is high, in addition to the release of seasonal consumer demand, it is also related to factors such as increased volatility in the capital market and prominent gold investment attributes.
Nicholas Frappell, global head of institutional markets at ABC, said that while there may be an incentive in Western markets to hedge against strong equities, gold's rally was largely driven by global factors, including the need for diversification from emerging market central banks and the drying up of sellers' markets.
The research report of Guojin Securities pointed out that since March, gold prices have risen sharply in the short term, silver inventories have remained depleted, and silver COMEX futures and silver ETF holdings have increased. In terms of commodity attributes, the growth of global mineral silver supply is limited, and the growth of industrial demand driven by photovoltaic + AI is expected to maintain a shortage of silver, and the fundamentals of supply and demand give strong support to silver prices. It is recommended to pay attention to Shengda Resources, Industrial Silver Tin, Yintai Gold, Jingui Silver and other targets.
China Securities Construction Investment said that the current round of inflation and asset price trends are very similar to the first wave of high inflation in the 70s, and there are signs of US inflation rising again in the future. Once the rebound in inflation is established and consumer confidence falls again, US stocks will once again face downward pressure. Gold has room for further upside after the data confirms that inflation will pick up again in the future. Gold has more credit hedging and anti-inflation attributes than U.S. stocks in the period of high inflation, and gold and U.S. stocks may turn from the current resonance rise to divergence in the future, and gold will have relative returns relative to U.S. stocks.
Huatai Securities Research Report believes that in the first quarter of 2024, the domestic RMB-denominated gold and silver prices will be better than the dollar-denominated LME gold and silver prices year-on-year, and they will achieve positive growth year-on-year. We believe that domestic gold and silver prices are better than overseas, mainly due to more accommodative domestic monetary policy. We believe that the current price of LME gold may rise to the range of $2,600 to $3,000 due to the return of U.S. liquidity to loosening, the world's major central banks continue to maintain a large level of gold purchases, coupled with the increase in the world's major gold ETFs and the risk of geopolitical events.
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