Precious metals, gold and silver, experienced significant declines in yesterday's trading session. The main contract for gold, 2604, closed at 1,062.00 yuan per gram, down 4.64%, while the main contract for silver, 2606, ended at 17,984 yuan per kilogram, plummeting 10.35%.
The primary reasons for the drop are likely the combined effects of rising inflation expectations and tightening liquidity. Geopolitically, Iran's largest natural gas field was attacked by the United States and Israel. Iran subsequently announced it would fully retaliate against U.S.-related oil facilities and designated energy infrastructure in Saudi Arabia, the UAE, and Qatar as legitimate targets. U.S. President Trump stated he does not wish for further attacks on Iranian energy assets. However, depending on Iran's future actions in the Strait of Hormuz, Trump may consider targeting more Iranian energy facilities. Overall, geopolitical tensions show clear signs of escalation, with crude oil prices continuing to rise, potentially shifting market focus towards U.S. inflation resurgence and economic stagflation.
Regarding the Federal Reserve, the FOMC meeting kept the federal funds rate target range unchanged at 3.50%-3.75%, aligning with market expectations. The statement indicated that committee members approved the rate decision with an 11-1 vote. The dot plot suggests only one rate cut each in 2026 and 2027, reflecting a more conservative path for rate reductions and highlighting the Fed's cautious stance amid multiple risks. Chair Powell noted that if there is no progress on inflation, rate cuts will not occur. While most officials do not view rate hikes as a baseline expectation, the possibility of a hike as the next policy move was indeed mentioned.
Currently, market focus is largely on the ripple effects of escalating geopolitical conflicts. In an environment of shifting risk sentiment, the liquidity available to support precious metal prices appears weak. Looking ahead, a neutral short-term view is maintained for precious metals, with close monitoring required on geopolitical developments and liquidity-related indicators.
Risk Warning: Fluctuations in the U.S. dollar price.
