Domestic precious metal prices rebound strongly

　　Source: Futures Daily

　　On November 4, domestic precious metals futures prices closed higher across the board. The main contract price of SHFE gold closed at 867.46 yuan/gram, up 2.52%; the main contract price of SHFE silver closed at 12,420 yuan/kilogram, up 3.39%; the main contract price of platinum closed at 355.80 yuan/gram, up 1.50%; and the main contract price of palladium closed at 232.25 yuan/gram, up 4.10%. Among them, palladium had the largest increase.

　　Zheng Hong, senior researcher at Zheshang Futures, believes that the previous sharp decline in gold and silver prices has made this rally more of an oversold rebound. The medium- to long-term narratives of global central banks buying gold, de-dollarization, and safe-haven demand have not changed, but expectations of high interest rates due to sticky inflation continue to suppress precious metal prices. Therefore, the current situation is more like the start of an oversold rebound and trend correction, rather than the confirmation of a full reversal. He suggests continuous attention should be paid to Federal Reserve policy and inflation data trends going forward.

　　Xia Yingying, head of the Precious Metals New Energy Research Group at Nanhua Futures, stated that the market currently expects the Federal Reserve to raise rates a total of 2.5 more times by the end of 2027 (including once in December 2026). This means there is little room for rate hike expectations to be revised even higher, so the fundamental pressure on gold is relatively limited.

　　Xia Yingying explained that the results of the US midterm elections similarly influence the pricing of precious metals. US President Trump suffered a setback in the midterm elections, and his policies will be constrained by Congress, making policy uncertainty tend to decrease, which is conducive to boosting market risk appetite. In broad asset allocations, stocks and gold will both benefit. She also reminded: “In this round of high volatility, precious metal prices show more risk-asset characteristics, rising and falling together with tech stocks, rather than behaving as traditional safe-haven assets.”

　　Speaking about platinum and palladium, Xia Yingying believes that since the outbreak of conflict in the Middle East, the correlation between oil prices and the platinum-palladium price spread has significantly increased, and oil prices now have a certain leading role in the trend of the platinum-palladium spread. Zheng Hong analyzed that in the short term, the oil price center dictates the safety margin in platinum-palladium spread trading; in the medium to long term, surging demand in the electronic cloth industry has driven up platinum demand in the fiberglass sector, cushioning some of the weakness in industrial demand for platinum, while palladium demand remains highly dependent on its use in gasoline car emission catalysts. With the continuing pressure from the trend toward electric vehicles, the platinum-palladium price spread has a relatively strong basis for robust performance in the medium to long term.

Editor: Zhu Henan