Shouchuang Futures: Short-term liquidity expectation tightening directly suppresses precious metal prices from rising

The Federal Reserve will hold an FOMC meeting on April 29. Market expectations for rate cuts in 2026 have cooled significantly: the probability of a rate cut within the year has fallen to below 20%, and the first rate-cut window has been pushed back to 2027.

As a result, the US Dollar Index rebounded strongly, breaking through the 103.0 level. The yield on the 10-year US Treasuries rose to above 4.3%. The opportunity cost of holding non-interest-bearing gold increased markedly, and short-term speculative funds withdrew from the precious metals market, shifting toward the US dollar and US Treasuries, creating periodical selling pressure.

Although the long-term logic for rate cuts has not changed, tightened short-term liquidity expectations directly suppressed the upward momentum in precious metal prices. Silver, which has stronger industrial attributes, is more sensitive to liquidity expectations, so it fell more than gold.

Profit-taking pressure at high levels intensified. In China, the increase in margin requirements amplified volatility, and the precious metals’ prior cumulative gains had been substantial: gold has risen more than 15% since the beginning of the year, and silver has risen more than 25%. Long positions show a strong willingness to take profits.

Meanwhile, starting today, the Shanghai Gold Exchange (SGE) raised the gold margin requirement to 21%, and silver margin requirements were increased accordingly. With higher trading costs for leveraged capital, market activity declined, and short-term price volatility was amplified, further increasing the magnitude of the pullbacks in gold and silver.

In the short term, it is not suitable to trade in a one-sided manner. It is recommended to stay on the sidelines as the primary approach. (First Capital Futures)