As the situation in the Middle East heated up further, global metal prices began to "heat up" shortly after the Asian session opened on Monday, reaching new highs. As of press time, COMEX gold rose nearly 1% during the day, reaching as high as $2454.2 per ounce, continuing to hit a record high. The domestic Shanghai gold lord closed up 2.81%, reaching an intraday high of 582.36 yuan / gram, with a tendency to break through the previous high.
Silver prices also continued the "soaring" mode, COMEX silver futures rose more than 6% on Friday, as of press time, COMEX silver futures rose 4.77% during the day, the highest intraday hit 32.750 US dollars / ounce, domestic, all contracts of Shanghai silver rarely touched the limit, Shanghai silver rose as much as 8% in a day, the price was reported at 8211 yuan / kg, international and domestic prices have hit an 11-year high.
LME copper futures rose nearly 3% during the day, with prices breaking above $11,000 per tonne. As of the close of trading on May 20, the main Shanghai copper reached 87,670 yuan/ton, breaking through the high point of 85,550 yuan/ton in 2006, and once again hitting a record high. At 23:50 Beijing time on May 14, 2024, during the U.S. trading session, the July Comex copper contract also had a rare short squeeze market.
The A-share metal sector has opened a carnival mode
Gold and silver futures rose sharply to drive the rise of the A-share precious metals sector on May 20, and Flush data showed that as of the close, the precious metals sector (881169) rose 7.61%, ranking first in the list of sector gainers. In the sector, Xiaocheng Technology (300139. SZ), Hunan Silver (002716. SZ), Sichuan Gold (001337. SZ) 3 stocks up to the limit, in addition to Hunan Gold (002155. SZ), Yintai Gold (000975. SZ) and other intraday prices are close to the daily limit.
Driven by gold and silver, the entire non-ferrous metal sector has also opened a "carnival" mode. Flush data shows that among the top 10 sectors on the list of sector gainers, there are 6 sectors related to non-ferrous metals, all of which rose by more than 3.5%. In addition to precious metals, the metal zinc sector (885970) rose 5.27%, and the industrial metal sector (881168) rose 4.66%.
Metal lead, copper metal and other sectors all rose in volume. 49 of the 61 stocks in the A-share metal copper sector closed up, and 23 rose by more than 5%, accounting for nearly 40%. Among them, electrical alloys (300697. SZ), North Copper (000737. SZ), silver nonferrous (601212. SH) and other hits the limit, Yunnan Copper (000878. SZ), Jiangxi Copper (600362. SH), Tongling Nonferrous Metals (000630. SZ) and other top gainers.
The rise in the precious metals sector is related to the international situation
Who is behind this wave of rising metal prices? Zhao Qixin, founder of Yingtian Financial Management, told Silver Persimmon Finance that due to the decline in US CPI, the market expects that the timing of US interest rate cuts will be advanced. At the same time, the news of the helicopter accident of the Iranian president has also stimulated the short-term hedging demand of the precious metals market.
Jin Guoqiang, director of the Zhongzhou Futures Research Institute, said in an interview with Silver Persimmon Finance that the rise of precious metals is based on the expectation of interest rate cuts by the Federal Reserve, and secondly, it is based on geopolitical conflicts and distrust of the dollar currency. He stressed that the main reason is that the international political situation is uncertain, conflicts are continuous, and sovereign countries and international capital are increasing their holdings of gold and silver.
Unlike gold, silver itself has the dual properties of a commodity and a precious metal. Zeng Zhu, senior business manager of Dongxing Futures Dalian Branch, analyzed that in the gold market this year, silver has a wave of performance, but the increase is inferior to gold. The upward trend of silver in this round is more due to its rise as a commodity attribute of non-ferrous metals. He said that non-ferrous metals have risen significantly since March. This is not only the geopolitical risk premium of the Russia-Ukraine war and the Palestinian-Israeli conflict, but also the expectation of the Fed's future policy. In this context, it is a cost-effective choice to have funds to pay attention to silver and pull up in this position. In addition, he said that the rise in silver is also related to the recent historic short squeeze of copper futures in New York.
Global production cuts pushed copper prices higher
In addition to gold, copper, which is widely used as an industrial raw material, is another hot spot in recent times. Jin Guoqiang said in an interview with Silver Persimmon Finance that the rise in copper prices is related to the latest data from the U.S. economy, but at the same time, he pointed out that this is more closely related to the recent breaking of the global copper concentrate supply and demand structure, with less supply but more demand. He said that in November 2023, news broke that a copper mine called Kobre in Panama, a subsidiary of Canada-based First Quantum Mining Company, was facing a shutdown. This is one of the largest copper mines in the world, with a production capacity of 400,000~500,000 tons, accounting for about 1.5% of global copper production. As can be seen from First Quantum's 2024 first quarter report, the copper mine has ceased production. At the same time, a copper mine owned by Anglo American, a mining giant in South America, has also lowered its production capacity, from 1 million tons/year to 700,000 tons/year ~ 800,000 tons/year.
In addition, the transformation of the new energy structure that the world is now facing, the vigorous development of artificial intelligence, and the increase in the demand for computing power have all led to an increase in the demand for the renewal and upgrading of global power transmission equipment, which has further increased the demand for copper. Jeff Currie, chief strategy officer at The Carlyle Group's Energy Pathways, also said in an interview with Bloomberg that this time the emergence of new forces in the economy, namely the emergence of artificial intelligence, the explosive growth of data centers and the green energy revolution, are boosting demand for copper. "Copper is the new oil. It's the best odds I've ever seen. Jeff Curry said.
However, Jin Guoqiang believes that the short-term increase in copper prices has accelerated, and it cannot be ruled out that there are reasons such as capital promotion.
Zeng Zhu said that the mining cycle of copper ore is relatively long, and the contradiction between supply and demand of copper is not easy to solve in a short period of time.