End of precious metal bull market
The end of precious metal bull market gold broke through 1450 US dollars / ounce overnight, with a minimum of 1447.89 US dollars / ounce. The bull market of gold seems to be coming to an end. SPDR, the world’s largest gold ETF, has sharply reduced its position by 13.19 tons, and its current position is barely above 900 tons, or 901.19 tons.
According to CME’s “Federal Reserve observation”: the probability of maintaining the current interest rate in the range of 1.50% – 1.75% in December is 94.8%, and the probability of reducing the interest rate by 25 basis points to 1.25% – 1.50% is 5.2%; the probability of maintaining the current interest rate in the range of 1.50% – 1.75% in January next year is 86.4%, the probability of reducing the interest rate by 25 basis points to 1.25% – 1.50% is 13.1%, and the probability of reducing the interest rate by 50 basis points to 1.00% – 1.25% is 0.5%.
The international gold price fell by more than 3.6% last week, not only recording a new low of $1456.10/ounce since early August, but also the biggest weekly drop since the week of November 11, 2016. The amazing rise of gold price from May to early September has stalled. The deadline for brexit was extended to January next year. The positive progress of trade negotiations between China and the United States. Officials from the Federal Reserve questioned the interest rate cut. The physical demand for gold declined, which further depressed the price of gold.
On the 12th, investors will focus on the speech of the US president, who is expected to deliver important information on trade issues. If its speech eases trade tensions, gold prices could face further plunges. In addition, Clarida, vice chairman of the Federal Reserve, will address monetary policy this evening, Beijing time, which is also expected to trigger market volatility.
The fall in gold led to a correction in precious metals, with silver spot prices down 6.8% since November and palladium spot prices down 6.04%.
Zheng Minggang, an analyst at Dongxing securities, said: physical gold positions fell significantly. Gold etf-spdr position decreased by 13.5 tons to 901.19 tons, the second largest drop since April this year; gold iShares position increased by 0.9 tons to 357.91 tons, and silver SLV position increased by 82.3 tons to 11793.57 tons. Gold non-commercial net long position increased by 3313 and silver non-commercial net long position decreased by 5681. The shift in market risk appetite has kept precious metal prices under pressure, forcing investors to reduce the proportion of gold investment in their portfolios.
Gold futures said: from the recent report released by the world gold industry association, since the third quarter, the net purchase demand of gold has still increased, but from the perspective of structure, individual investors are deterred from the current price of gold, and more choose to sell or wait and see, while the third quarter purchase demand is mainly the support of ETF purchase demand, but from the perspective of ETF position in the fourth quarter, gold and silver ETF positions have declined; from the perspective of physical purchase demand, the Central Bank of China ended its continuous increase in gold holdings in October, and private purchase demand in India fell by nearly half, or led to the later pressure of gold to fall; silver this week was short and closed the negative line.
Data released on Wednesday (November 7) showed that the central bank’s gold reserves ended a decade of gains and were flat on a month on month basis. China’s gold reserves at the end of October were 62.64 million ounces (1948.32 tons), in line with September China has always been an important player in the gold market. According to the latest research of the world gold association, the central bank bought nearly 550 tons of gold this year.