Precious metal prices rose in July

 

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Precious metal prices rose in July. According to the commodity market analysis system of the business community, the price of gold in the Spot market will be 454.47 yuan/g on July 14, 2023, up 1.31% from 448.60 yuan/g in the Spot market at the beginning of the month (July 1)

 

Silver fell back to the beginning of the month

 

According to the commodity market analysis system of the business community, the average price of silver in the market will be 5808 yuan/kg on July 14, 2023, up 6.92% from 5432.33 yuan/kg at the beginning of the month (July 1).

 

Summary of Price Trends of Precious Metals and Crude Oil

 

In the early stage, the correlation between precious metals and crude oil trends is strong. After the second half of 2022, precious metal prices have bottomed out and stabilized, and the magnitude of macro factors affecting them has begun 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. Mainly due to the increased impact of risk aversion on the rise of precious metal prices. Recently, crude oil prices have rebounded, and precious metal prices have also followed suit.

 

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 have converged, but the decline in silver was deeper from April to August, and the recent recovery has been more significant. In December, silver continued its strong trend last month, and gold began to consolidate at high levels. In 2023, precious metal gold and silver have consolidated at high levels, with a slight decline in February. Since March, precious metal prices have 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 Fundamentals Data

 

Data shows that the US consumer price index recorded its smallest annual increase in more than two years in June, prompting traders to bet that the Federal Reserve may end the current rate hike cycle after raising interest rates this month. Before the data was released, CME Federal Reserve observation showed that the probability of the Federal Reserve maintaining interest rates unchanged from 5.00% to 5.25% in July was 7.6%, and the probability of raising interest rates by 25 basis points to the range of 5.25% to 5.50% was 92.4%; The probability of maintaining interest rates unchanged by September is 6.1%, the probability of a cumulative 25 basis point increase is 75.4%, and the probability of a cumulative 50 basis point increase is 18.5%. After the data was released, the probability of the Federal Reserve maintaining interest rates unchanged from 5.00% to 5.25% in July is 10.1%, and the probability of raising interest rates by 25 basis points to the range of 5.25% to 5.50% is 89.9%; The probability of maintaining interest rates unchanged by September is 8.9%, the probability of a cumulative 25 basis point increase is 80.3%, and the probability of a cumulative 50 basis point increase is 10.8%.

 

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At present, the price of precious metals has 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 may lead to a relatively strong sense of risk aversion, which is currently reflected in prices. Some central banks around the world increased their holdings of Gold reserve, which also formed some support for gold prices.

 

It is expected that the price of precious metals will fluctuate strongly and consolidate in July, with a bullish outlook in the medium to long term.

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