According to the data monitoring of business agency, the average spot price of domestic gold on 28th was 330.30 yuan / g, 3.79% lower than that on 1st day, 343.30 yuan / g; 358.55 yuan / g, 7.88% lower than the annual peak (September 4); 284.10 yuan / g, 16.26% higher than that at the beginning of the year (01.01).
On the 28th, the spot price of silver in China was 4096 yuan / kg, down 6.21% compared with the spot price of silver on the 1st, 4367 yuan / kg; on the 4th of September, the spot price of silver was 4771 yuan / kg, down 14.15%; and on the 1st of the year, 3617.67 yuan / kg, up 13.22%.
Early release of monetary easing expectation
The market gave feedback on the Fed’s October interest rate resolution in advance. The federal funds rate was cut by 25 basis points to 1.50% – 1.75%, basically in line with market expectations.
In addition to the Fed’s interest rate cut, the following are the loose policies:
Brazil’s central bank cut interest rates by 50 basis points to 5%, the third rate cut in the year.
The Saudi central bank cut the repo rate from 250bps to 225bps and the reverse repo rate from 200bps to 175bps.
The Bank of Bahrain cut the overnight deposit rate from 2.25% to 2%, and the Bank of Bahrain cut the one month deposit rate from 2.85% to 2.6%.
In addition, the central banks of Kuwait and the United Arab Emirates have also cut interest rates.
The wave of monetary easing at the end of October did not become the main factor affecting the precious metal market.
According to the data of business agency, the spot price of precious metal gold was basically stable in October, with a slight decrease of 0.77% in the month, and the spot price of precious metal silver rose by 1.92%.
Amplification of factors influencing the negotiation process of major trading countries on precious metals
With the reversal of market expectations for the trade negotiation process of major trading countries, the gradient of risk aversion slowed down. While there is still uncertainty about the future, optimism prevailed in November.
On the morning of November 26, Liu He, a member of the Political Bureau of the CPC Central Committee, vice premier of the State Council and China’s leader of the China US comprehensive economic dialogue, spoke with us trade representative lait Heze and finance minister mu nuqin. The two sides discussed the resolution of each other’s core concerns, reached consensus on the resolution of relevant issues, and agreed to maintain communication on the remaining issues of the first phase of the agreement and consultation. The first phase of the trade agreement between China and the United States is expected.
As the influence of risk factors weakens, the demand for precious metals to avoid risks is hardly favored by the market.
Physical demand moves down in the third quarter
According to the data of the world gold association, the global demand for gold ornaments fell by 16% year-on-year in the third quarter to 460.9 tons, and the investment demand for gold coins and bars halved.
In the third quarter, the domestic demand for gold ornaments fell 12% to 156.3 tons year on year, the fourth consecutive quarter of year-on-year decline, 10% lower than the single quarter average of 173.5 tons in the past five years. China’s demand for gold bars and coins fell 51% to 42.8 tons, the lowest level in three years.
The growth of gold reserves of major central banks slowed down year on year in the third quarter
According to the world gold association, the gold reserves of the world’s major central banks increased 156.2 tons in the third quarter. Growth slowed 38% compared with the same period last year. (Note: the third quarter of 2018 is the highest quarter for central banks in the world since we have recorded.)
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China’s gold reserves at the end of October were 62.64 million ounces, compared with 62.64 million ounces in September, the State Administration of foreign exchange said Thursday.
Although the growth slowed down year on year, the trend of increasing gold holdings by major central banks around the world remained unchanged. It is reported that in the first three quarters of 2019, the world’s major central banks bought 547.5 tons of gold, up 12% year on year. Increasing the number of central banks, such as Hungary, Poland and Serbia.
Long empty game in December
1. Gold has a monetary attribute. Central banks have frequent loose policies, and interest rate cuts support precious metal prices.
As recently reported, ASB Bank expects the New Zealand Federal Reserve to cut interest rates once instead of twice in 2020. The overall direction is still to cut interest rates. (in August 2019, the New Zealand Federal Reserve cut the interest rate by 50 basis points, currently, the official interest rate of the New Zealand Federal Reserve is 1%)
1. It is uncertain whether the new tariffs on US $156 billion worth of Chinese goods will be cancelled or delayed since they came into effect on December 15, especially the frequent port related operations of the United States in the near future.
2. The UK will hold a general election on December 12, which will affect the process of brexit. There are large uncertainties, which may increase the demand for hedging.
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