Gold and Silver Plunge: Is it a Short-term Adjustment or the End of the Trend?
Gold and silver have recently plummeted, with gold dropping from $5400 to below $4500 in half a month, nearly 10% down in a week; silver fell over 14% in a week, marking a rare decline in many years.
Core Reasons for the Plunge
1. Oil Prices Reverse Restraint: The US-Iran conflict has pushed oil prices up, leading to a surge in dollar demand, which has suppressed gold priced in dollars.
2. Federal Reserve Policy Shift: Interest rates remain high, and the expectation of rate cuts has been significantly lowered, increasing the attractiveness of the dollar. Gold does not yield interest, and holding costs are high, leading funds to shift to the dollar.
3. Previous Overheating in Price Increase: The premium of gold prices relative to the 5-year moving average has reached a historic high, with excessive speculation and strong demand for market correction.
Long-term Logic Unbroken
1. Ongoing Geopolitical Conflicts: The situation in the Middle East is unlikely to calm down in the short term, and safe-haven demand remains.
2. Progress in De-dollarization: Central banks around the world have net purchased gold for 16 consecutive years, enhancing the status of gold reserves.
3. Cracks in Petro-dollar: China is building a "Renminbi + Oil + Gold" system, shaking the old pattern of the dollar.
Market Outlook
In the short term, gold may test the support at $4400, and if it breaks, it may look towards $4000; in the medium to long term, institutional target prices still look above $6000.
Strategy Recommendation: In the short term, panic can be leveraged for operations, but do not lose the bottom position; when prices drop to a position of others' fear, it is the right opportunity to layout positions.
$XAU $XAG $BTC
