Historical high: Shanghai Silver successfully recorded three consecutive positives in the daily line
Overnight, precious metals continued a rapid rise. As of press time, the most violent volatility in Shanghai silver rose to 9,020 yuan/kg, an increase of more than 2%, successfully recording a three-game positive daily line hitting a record high, with a cumulative increase of more than 8% this month.
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So the question is, what has driven the new round of abnormal movements in the market, and where should the market go in the future?
Technical buying drives gold and silver to be strong:
In fact, in this round of precious metals, there is a clear differentiation between weak gold and strong silver. The market believes that the core logic lies in the push up the rise in technical buying.
The current gold-silver ratio reaches 85-90, far higher than the average of 40-50 in the past 50 years. Some market traders believe that silver is seriously undervalued compared to gold. Based on the historical law of the trend of gold-silver ratio toward mean regression after the crisis, many funds have bet on silver's rebound trend. At the same time, international silver also broke through the important resistance level of US$36 per ounce over the years, attracting a large number of technical buying and further pushing up prices.
In addition to capital promotion, the growth of industrial demand is also a major boost to the strengthening of silver.
As we all know, although trade disputes are still around, the market is actually far more optimistic about related matters at the moment, which has also driven the recovery of expectations of industrial demand. Silver's demand in the photovoltaic industry (silver paste is the core conductive material), new energy vehicles (electronic components, contacts), etc. continues to grow rapidly. The long-term trend of global energy transformation lays a solid foundation for silver industrial demand. At the same time, the development of technologies such as 5G, the Internet of Things, and AI has promoted the steady growth of demand for silver in the fields of consumer electronics and semiconductors. Strong growth in industrial demand provides solid support for silver prices.
The return of financial attributes drives capital inflows:
Another important point is that the market generally expects major economies to enter a cycle of interest-cutting, and the low interest rate environment reduces the opportunity cost of holding interest-free silver and increases its attractiveness. In addition, inflation concerns still exist, and silver, as a traditional anti-inflation asset, has attracted attention.
At the same time, although global central banks still focus on increasing their purchase of gold in pursuit of safe assets under the background of de-dollarization, as gold prices remain high, the market does not rule out that the subsequent catalysis of events similar to the Russian Central Bank's inclusion of silver into reserve assets may further benefit silver.
Institutional view: Maintain bullish in the medium and long term
From the latest views of major institutions, everyone still maintains bullish logic for the medium and long term market in precious metals.
In the latest research report, Everbright Futures pointed out that gold is still operating in the fluctuating range, which indicates that the market's disagreement on gold still exists, which may be due to the phased easing of the trade conflict, the hawkish attitude of the Federal Reserve and the weakening of the central bank's efforts to purchase gold. However, as gold remains at a high level, other platinum group metals are "ready", especially in terms of the ratio to gold, there is a strong willingness to make up for the rise, while silver is expected to continue to advance to the previous high point driven by platinum and palladium. Based on gold price of $3,300 per ounce, if the gold-silver ratio drops to the range of 70 to 80, the silver price is expected to rise to between $41 and $47 per ounce, which still has a lot of room for growth compared to the current situation, maintaining the judgment of buying on dips.
Industry Futures believes that silver will repair its valuation upward. It believes that there is no clear news on the first day of the second round of Sino-US trade negotiations, but the signals sent by both sides are positive, and the two sides will continue negotiations today. The reciprocal tariff suspension period will end on July 8/July 9, and the United States may speed up tariff negotiations with other countries. However, considering that the US tax cut bill has entered the Senate voting stage, the US fiscal deficit is prone to increase and difficult to decrease, and the risk of phased stagflation in the US economy still exists in the second half of the year. The big cycle is still good for gold prices. It is expected that the short-term gold price trend will fluctuate, and the medium- and long-term gold price center will still move upward. Strategy, rely on the long-term moving average pullback to buy, or continue to hold and sell imaginary put options. The gold-silver ratio is relatively high, and the silver valuation is relatively low. If the gold price remains strong, silver will be driven by upward recovery of valuation. Those who are cautious can still hold and sell put options with imaginary value, while those who activists can make a light position and try long silver AG2508 contracts whenever they return.
