Spot precious metal prices
The average price of silver in the early trading on April 2 was 5,185 yuan/kg, compared with the average early (March 1) spot market price of 5,480.33 yuan/kg in early trading, a decrease of 5.39%; compared with the spot market price at the beginning of the year (January 1) The average price was 5550 yuan/kg, a decline of 6.58%.
The spot price of gold on April 2 was 368 yuan/g, which was an increase of 0.66% from the average spot market price at the beginning of the month (3.1) of 365.60 yuan/g, an increase of 0.66%; compared with the beginning of the year (01.01) the spot price of gold was 392.70 yuan/g, a decrease of 6.29% .
The price data during the year showed that the precious metal gold and silver fell at a similar rate. In the early stage, silver was affected by the news of US retail investors and fluctuated greatly, and then retraced the speculative gains on the news. In March, the price of silver began to make up for the decline, and gold began to fluctuate slightly sideways.
Similar to GameStop's silver short-selling news, it helped the silver price rebound sharply in mid-to-late January. However, based on the silver market size reaching around US$200 billion, coupled with the regulatory policy of exchange holding restrictions, silver short-selling did not happen quickly. Return to the general trend of precious metals falling.
Will the recently announced US non-agricultural employment data for March have a significant impact on the fundamentals of precious metals?
The impact of U.S.-Africa data on gold
The number of non-agricultural employment in the United States in March hit the largest increase since August. Affected by the rapid vaccination and the implementation of US$1,400 relief funds, non-agricultural employment increased by 916,000 in March, and the job market represented by the private sector rebounded significantly.
As the government gradually eased activity restrictions, the bars, restaurants, and hotels that were most affected by the epidemic increased employment by 280,000 people; the construction industry, which was affected by the snowstorm in February, also improved the employment situation in March. In addition to the better performance of new jobs, the unemployment rate also fell to 6% in March.
The data may increase market expectations of the Fed's early tightening. We believe that the stimulus policy in the second quarter will gradually be implemented and the economy will accelerate recovery. The dollar will continue to strengthen in the future, which may put pressure on precious metals.
Can the speculative enthusiasm for U.S. gold bullion and coins continue
Unlike the trend of bulk metal commodities, gold has been falling since its peak in August 2020. The current price is at a low level in the past 10 months and is close to the price level at the end of March 2020.
Before the downturn, precious metals were in the upward phase, and gold bullion and coin investment was more enthusiastic in the United States. In 2019, the retail investment in gold in the United States was about 20 tons, a relatively weak level, and then it has more than tripled in 2020, reaching 66 tons. On the one hand, after 2016, the demand for gold bullion and coin investment has moved down the ladder and fell to the bottom of history; on the other hand, the special market in 2020 will boost speculative enthusiasm.
The special market is mainly reflected in the following 2 points:
1. The rising trend of gold prices in 2020
The rising trend of gold prices in 2020 has provided a huge impetus for the surge in investment enthusiasm. Especially in August, it hit a record high. The strong performance of gold prices attracts new investors into the market.
2. Risk aversion brought by the epidemic
The panic of the global new crown pneumonia epidemic in 2020 will influence the price of commodities to fluctuate sharply. The sharp increase in the sales of US Mint gold coins from March to April can be clearly reflected. Of course, the international bulk prices plummeted in March, and the overall rebound in April brought a wave of perfect market conditions. Speculation opportunities coupled with concerns about interest rate cuts and inflation, such as the Fed's move to reduce interest rates to zero in the first quarter of 2020 will also stimulate investment demand in 2020.
So can the speculative enthusiasm for gold bars and coins in the United States continue in 2021?
According to relevant data, the sales of Golden Eagle coins in January 2021 exceeded 220,000 ounces (about 6 tons). This is the highest monthly total sales since December 2009 and the strongest January sales so far this century.
Judging from the January data alone, the enthusiasm is still high, mainly due to the expected release of the US dollar at the beginning of the year. However, from the perspective of the domestic consumer market, private investment demand for gold bars and coins has not been very high recently. Although the price of gold has recently fallen from a high level, there are not many long-term investment customers who dare to operate at a high level. After all, under the situation of uncertain prospects, If you rush to speculate, there is a high probability that you will be able to take orders from a high position.
Where to go for precious metal prices in the post-epidemic era
1. Lack of investment demand
After the investment peak in 2020, the price of precious metals gradually weakened. With the continuous introduction of vaccines into the market, expectations of economic recovery from the epidemic have intensified, and the possibility of real interest rates rising has increased.
The expected outflow of investment funds from gold ETFs has increased, and domestic gold ETF holdings have fallen due to factors such as strong exchange rates.
2. Alternative asset closure
Other alternative assets, including the recent soaring commodity market and the so-called competing Bitcoin, have diversified investors' demand for gold.
It is expected that the downside of precious metals will be narrowed, and the later period will mainly focus on whether the fundamental turning point will come.
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