Gold prices fell back to the beginning of the month

On June 14th, gold prices fell back to the beginning of the month. According to the commodity market analysis system of SunSirs, on June 14, 2023, the price of gold in the Spot market was 450.07 RMB/g, with a daily drop of 0.5%; The price of gold in the Spot market was 449.70 RMB/g, up 0.08% from the beginning of the month (June 1).

Silver was gaining momentum

The upward trend of silver in June was even stronger. According to the commodity market analysis system of SunSirs, the average silver market price was 5,618 RMB/kg on June 14, 2023, with a daily drop of 0.51%; The average silver market price was 5,446 RMB/kg at the beginning of the month (June 1), up 3.16%.

Summary of Price Trends of Precious Metals and Crude Oil

In the early stage, the correlation between precious metals and crude oil trends was strong. After the second half of 2022, precious metal prices had bottomed out and stabilized, and the magnitude of macro factors affecting them began to show differentiation. The trend of precious metals and crude oil began to converge in late March, but after mid April, the trend began to diverge again. The reason was mainly due to the increased impact of risk aversion on the rise of precious metal prices.

Comparison of precious metal gold and silver price trends in the past year

In 2022, the rise and fall trends of precious metal gold and silver had converged, but the decline in silver was deeper from April to August, and the recent recovery was more significant. In December, silver continued its stronger trend last month, and gold began to consolidate at high levels. In 2023, precious metal gold and silver consolidated at high levels, with a slight decline in February. Since March, precious metal prices had started to rise. Silver prices began to decline in May, while gold remained relatively strong. In June, gold prices reached a high level and silver prices began to rise.

Policy logic

According to data released by the US Bureau of Labor Statistics, the US CPI increased by 4% year-on-year in May, marking the 11th consecutive month of decline, reaching the lowest level since March 2021, lower than expectations of 4.1% and the previous value of 4.9%; The CPI rose 0.1% month on month, lower than the expected 0.2%, and the previous value was 0.4%. In May, the core CPI increased by 5.3% year-on-year and 0.4% month on month, in line with expectations. After the data was released, the market generally expected the Federal Reserve to suspend interest rate hikes at this week's policy meeting. According to CME's "Federal Reserve Observation", the interest rate futures market expected the likelihood of the Federal Reserve suspending rate hikes in June to be almost 100%, but the likelihood of a rate hike in July increased from about 60% a day ago to 66.5%.

Fund logic

On June 13th, the trading volume of gold on the Shanghai Gold Exchange was 17,130 kilograms, an increase of 5.49% compared to the previous trading day. The trading volume of silver was 508,586 kilograms, a decrease of 13.20% compared to the previous trading day. The gold inventory of the previous exchange was 2,739 kilograms, unchanged from the previous trading day. Silver inventory increased by 18,436 kilograms to 1,477,667 kilograms compared to the previous trading day.

The newly announced gold SPDR ETF position was 931.43 tons, which was unchanged from the previous trading day. The position of silver SLV ETF was 14,463.73 tons, a decrease of 22.84 tons compared to the previous trading day.

Downward Space for Precious Metals in the Future Market Narrowed

As of June 14th, precious metal prices had been fluctuating in the high range after hitting a 10-year high in the early stage. In the early stage, we expected that under the high inflation and high interest rate hikes, the pace of overseas economic recession might lead to a relatively strong sense of risk aversion, which was currently reflected in prices. Some central banks around the world increased their holdings of gold reserve, which also formed some support for gold prices.

The expectation of the Federal Reserve raising interest rates in June weakened, and the market was generally expected to maintain interest rate levels unchanged at the June interest rate meeting; The news of no interest rate hike was short-term positive for precious metal prices. In addition, the People's Bank of China lowered the Open market operation interest rate to weaken the overseas safe haven demand of the US dollar, and the weakness of the U.S. Dollar Index benefited the commodity prices denominated in US dollars. It is expected that the downward space for precious metal prices will narrow in the short term, with short-term fluctuations and consolidation being the main focus, while the medium to long term remains bullish.

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