Huatai Futures: Gold and other precious metals declined yesterday, making short-term trading more difficult.

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Source: Huatai Futures

Author: New Energy and Nonferrous Metals Group

Related Commodities: Shanghai Gold, Shanghai Silver

Yesterday, precious metals fell sharply. In the daytime session, the main contract of Shanghai Gold (2606) closed at 1023.78 yuan/gram, down 1.27%; the main contract of Shanghai Silver (2606) closed at 17621 yuan/ton, down 5.60%.

The underlying logic behind the sharp drop yesterday remains closely tied to geopolitical risk. On April 1, the Office of the Supreme Leader of Iran posted on social media that it had published the content of the Supreme Leader Mujtaba Khamenei’s first speech, reiterating that Iran will continue to blockade the Strait of Hormuz as a countermeasure. In addition, the Office of the Supreme Leader of Iran also posted the speech content, saying that Iran is studying ways to open up “other potential fronts,” and believes that the opponent in the relevant fields “lacks experience and has clear weaknesses.” If the fighting continues, after taking related factors into comprehensive consideration, “these fronts will be launched.”

On the U.S. side, Trump said in a speech that the U.S. military had achieved a rapid and decisive victory. Trump emphasized that the core strategic goal is close to being achieved: “We have to complete the mission, and we have to complete it very quickly. In addition, he again mentioned the time frame; he said, ‘Over the next two to three weeks, we will deal them a severe blow. We are resolving all of the United States’ military concerns as quickly as possible, and very fast, according to the plan. Regime change is not our plan, but it happened.’” He threatened that this would send Iran back to the Stone Age that they belong to.

In this round of market action, precious metals prices have surged and then plunged. Geographically, both the U.S. and Iran have repeatedly changed market expectations regarding a ceasefire; in the short term, it is not advisable to chase long/short positions. In the medium to long term, if the Strait of Hormuz is long-term blocked or the U.S. and Iran fall into a military stalemate, precious metals prices will still trade in a range until the U.S. shows clear signals of an economic stagflation. In the medium to long term, prices can still be viewed slightly more bullishly.

Risk Warning: Fluctuations in U.S. dollar prices

Qualification for Investment Advisory Services: CSRC License No. 【2011】1289

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