China-Singapore Jingwei, May 26 (Zhang Shunan, Dong Xiangyi, Song Yafen) Spot gold and silver plunged in the market.
Screenshot of Wind
On the morning of the 26th, spot gold opened higher and then fell rapidly. It fell below the $4,550 mark during the session and is now down 0.45%; COMEX gold is now down 0.49%, at $4,551.4.
Spot silver fell simultaneously, falling more than 1% during the session and was now at $77.462; COMEX silver was now down 0.8% at $77.77.
According to CCTV News, Captain Tim Hawkins, spokesman for the U.S. Central Command, said that the U.S. military carried out self-defense strikes in southern Iran on the 25th, "aimed at protecting U.S. forces from threats posed by the Iranian army."
A spokesman for the U.S. Central Command also said that the targets included missile launch sites and Iranian ships trying to lay mines. "U.S. Central Command continues to defend U.S. forces while maintaining restraint during the current ceasefire."
According to news from Iran, late at night on the 25th Iranian time, explosions were heard from many places along the Strait of Hormuz such as Bandar Abbas Port, Sirik and Jask in southern Iran, and the situation was subsequently "under control."
"After the United States suddenly launched an attack on Iran, international spot gold fell below US$4,550 per ounce. The phenomenon of 'safe haven assets falling instead of rising' in the market actually reflects that the current market trading logic has shifted from 'geographical hedging' to 'inflation and interest rate expectations.'" Li Gang, research director of the China Foreign Exchange Investment Research Institute, told Sino-Singapore Jingwei.
Li Gang said that in theory, the escalation of the conflict between the United States and Iran would stimulate safe-haven demand and push up gold, but this time the market is more worried about the risk of the Strait of Hormuz pushing up oil prices and reigniting global inflationary pressure, which will in turn force the Federal Reserve to maintain high interest rates or even postpone an interest rate cut. In this case, U.S. bond yields and the U.S. dollar strengthened in stages, suppressing gold. At the same time, gold has already accumulated huge gains, and some funds have taken advantage of geopolitical events to make profits, which has also intensified the correction in gold prices. In other words, what is currently traded in the market is not the "war itself", but the "high oil price-high inflation-high interest rate" chain that the war may bring about.
According to Liu Dongbo, a senior analyst at the SDIC Futures Research Institute, in the short term, the negotiations between the United States and Iran are unresolved. Although both sides are seeking to escape, they will still strive for greater leverage with a tough stance. When the Strait of Hormuz will be opened to navigation has become the core of the trend of global commodities. War information is changing rapidly, and there are still differences between the two sides. Precious metals are fluctuating waiting for further clarity on the situation between the United States and Iran. The market has optimistic expectations for reaching an agreement. Once the war ceases, inflation and interest rate hike expectations are expected to be suppressed, and there is some room for precious metals to rebound.
Wang Weimang, investment manager of the Asset Management Department of Zhonghui Futures, believes that the details of the U.S.-Iran negotiations are still likely to go back and forth, so even if the negotiations are completed, it will not bring about a sharp increase in the price of gold. "It is normal for gold to open higher today and then go lower."
Wang Weimang analyzed that the reason for the plunge in gold prices is mainly that the US-Iran peace talks have taken a big step forward, the short-term liquidity crisis has been released, and the sentiment on precious metals has eased.
"The difference between the current situation and the past is that even if the Strait of Hormuz is reopened, global interest rates will be difficult to decline quickly." Wang Weimang further explained that first, physical repairs will take time. Mine clearing operations are expected to take 6 months, and the reconstruction of damaged oil wells will take 3-4 months. The supply side can only go online. The second is that the previously suppressed industrial demand will rebound quickly after the supply is restored, coupled with the pressure of historically low inventory reconstruction, the supply and demand mismatch will limit the sharp decline in oil prices; third, the current decline in oil prices is more of a mechanical response to position closing, rather than substantive changes in fundamentals.
Green Dahua Futures Research Report believes that changes in U.S. bond interest rates and fluctuations in the U.S.-Iran situation are two important factors currently affecting the trend of gold. If the U.S.-Iran situation eases, it will have a supporting effect on gold, and silver's own industrial attributes will bring greater price flexibility. How the situation between the United States and Iran will evolve in the future and the navigation situation in the Strait of Hormuz need to continue to be observed. Affected by geopolitics, the market has great short-term uncertainty, so investors should pay attention to controlling their positions and preventing and controlling risks. (China-Singapore Jingwei APP)
(The opinions in this article are for reference only and do not constitute investment advice. Investment is risky, so be cautious when entering the market.)
