Guoxin Futures: Gold and silver are weakly trending; Shanghai silver leads the decline

The precious metals market is seeing choppy but generally weak trading, with both gold and silver prices pulling back. The main contract for Shanghai Gold fell by 1.33%, to 1133 yuan/gram; the main contract for Shanghai Silver dropped sharply by 4.19%, to 20,923 yuan/kilogram.
On the macro level, market expectations for the Federal Reserve to cut interest rates within the year have significantly weakened; the convergence of rate-cut expectations has driven the U.S. dollar higher, putting downward pressure on the valuation of precious metals. On the geopolitical front, Iran’s newly appointed top leader took a hardline stance, saying, “We will not give up on revenge; the Strait of Hormuz will remain closed,” shattering market hopes for a rapid easing of Middle East tensions. But at the same time, diplomats released signals of compromise, saying that some countries’ ships can pass after coordination, and the back-and-forth in information has further heightened market uncertainty. In addition, a sharp plunge in U.S. equities triggered a liquidity crisis across global equity markets; to fill margin shortfalls, some institutions were forced to sell various assets, including gold, causing safe-haven assets at times to fall in step with risk assets. This “liquidity shock” has obscured the underlying logic of how geopolitical risks are priced long-term for strategic resources, leading to passive liquidation in the precious metals sector.
In the short term, geopolitical risk is still building, but the liquidity shock has become the core variable driving market sentiment. The fundamental logic of gold as the ultimate safe-haven tool has not changed; the current selling is more technical and passive, and any pullback could provide a window for long-term strategic allocation. Silver, due to its stronger attributes for financial speculation, has fallen further. In terms of trading, it is recommended to hold long positions in gold as the base position. (Guoxin Futures)