SunSirs: Silver Fell to the Low Range in Early January, Gold Hit a New Low in the Past 10 Months

Spot precious metal prices 

The average price of silver in the early trading on March 5 was 5,134.33 yuan/kg, compared with the average early-month (March 1) spot market price of 5,480.33 yuan/kg, a decrease of 6.31%; compared with the silver spot price at the beginning of the year (01.01), 5550 yuan/kg , A decrease of 7.49%.

The spot price of gold on March 5 was 370.80 yuan/g, which was a drop of 3.12% from the average spot market price of 365.60 yuan/g at the beginning of the month (3.1), and a decrease of 9.80% from the spot price of 392.70 yuan/g at the beginning of the year (01.01). .

At present, silver has fallen to the low range in early January, and the price of gold has been falling continuously, hitting a new low in nearly October.

Silver fell to the low range in early January

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 about 200 billion US dollars, coupled with the regulatory policy of exchange holding restrictions, silver short-selling did not happen quickly.

Gold hits a new low in nearly 10 months

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.

The main reason for the precious metals downgrade in March

1. Soaring bond yields

Powell's remarks on Thursday caused the 10-year U.S. Treasury yield to rise above 1.5%. Rising U.S. Treasury yields have increased the opportunity cost of holding non-yielding gold and weakened the attractiveness of gold as an inflation hedge.

2. 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.

3. Alternative asset closure

Other alternative assets, including the recent soaring commodity market and the so-called competing Bitcoin, have diversified investors' demand for gold.

Does the turning point come

Fundamentally, the increasing demand for solar panels in the automotive industry and other industrial uses will boost the demand for silver from solar photovoltaics in the future. In the long term, real interest rates will remain low, central banks of developed economies will continue to purchase government debt, and industrial demand will increase. The demand for jewellery and silverware will also increase, the demand for silver used in disinfection and the medical industry and the supply of silver ore will decrease, and silver will support it.

The downward space for precious metals is expected to narrow, and the later period will mainly focus on today's non-agricultural report data.

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