The precious metals market underwent what resembled a "stress test" over the past week, as gold and silver experienced significant pullbacks amid high volatility. This has prompted many long-term bullish investors to reassess their positions, with confusion and unease often following—a true reflection of market sentiment.
However, in the world of investing, every deep correction may signal the quiet opening of another door. Just as "a whale fall gives life to a myriad of creatures," the flow of capital, shifts in sentiment, and the reshaping of logic often occur subtly during such times. It is worthwhile to both look back at the room for recovery and future prospects created by the decline in precious metals, and to look ahead to other sectors that may benefit or are currently building momentum. After all, the market never follows only one narrative, and opportunities often await quietly around the corner.
The long-term logic for precious metals may still be intact. On one hand, the continuous expansion of global debt is intensifying central banks' concerns about asset security. By September 2025, global debt had reached $345.7 trillion, equivalent to 3.1 times global GDP. Among this, U.S. Treasury debt has surpassed $38 trillion, exceeding the country's GDP. Faced with such massive debt and potential repayment risks, "diversification" has become a necessity rather than an option for countries managing their foreign exchange reserves. Increasing gold holdings acts as insurance for these reserves, not only hedging against potential dollar fluctuations but also quietly enhancing the credibility of their domestic currencies. This trend continues; for example, gold accounted for approximately 9.5% of China's foreign exchange reserves by the end of last year. Compared to some developed nations, this proportion still has room to grow, implying that long-term gold purchasing demand may provide solid support for gold prices.
Another undeniable backdrop is the gradual shift in global monetary policy. When major economies begin discussing or have already entered a rate-cutting cycle, inflation expectations often rise, and the real value of currency may face dilution. In such an environment, gold's appeal as a time-honored store of value naturally becomes prominent. Currently, signals from the Federal Reserve regarding future rate cuts, coupled with domestic efforts to maintain liquidity, point toward a more accommodative monetary environment taking shape. This provides a macroeconomic foundation for gold's long-term performance.
Thus, the two core narratives driving the long-term strength of precious metals remain robust. While market sentiment may fluctuate, these underlying trends continue to flow steadily beneath the surface.
However, some funds are currently taking profits from precious metals. Gold has accumulated substantial gains over an extended period, and the recent sharp correction provided a window for some investors to cash out. With the Lunar New Year approaching, market trading sentiment has eased. Short-term factors that previously drove up gold prices—such as geopolitical tensions, uncertainty around Federal Reserve appointments, or government shutdown risks—have largely been resolved or concluded. As event-driven momentum fades, the rationale for further short-term bullish bets naturally weakens.
Human nature tends toward caution when prices are high. For funds that have already reaped significant profits in this cycle, the potential upside at relatively elevated levels may no longer justify the perceived risks. Consequently, it is understandable that some capital is choosing to step back and wait. These "liquid funds" exiting hot sectors will eventually need to find new fertile ground.
The scale of capital tied up in precious metals is enormous—truly a case of "a whale fall giving life to myriad creatures." The global market for precious metals is vast; some analyses suggest that if existing physical stocks were valued at market prices, the total size of gold and silver would rank among the top global assets. In domestic futures markets alone, despite the recent deep adjustment, the capital locked in main contracts for gold and silver still amounts to hundreds of billions. In contrast, many other mainstream commodities—such as soda ash, glass, iron ore, soybean meal, and palm oil—each typically see capital commitments in the tens of billions.
Even if only a small portion of capital flows out of precious metals, it could create ripples in other sectors. Therefore, during this window of reflection and outlook ahead of the Lunar New Year, it is worth considering which areas might attract this capital next.
In the waves of economic cycles, commodity rotations often follow a certain internal sequence. Market experience suggests the transmission path typically flows from precious metals (e.g., gold, silver) → non-ferrous metals (e.g., copper, aluminum) → energy (e.g., crude oil) → chemicals → agricultural products. This process resembles an economic recovery "relay race": precious metals, sensitive to interest rates, lead when a rate-cutting cycle begins or safe-haven sentiment rises; as economic recovery expectations strengthen, demand for industrial metals tied to infrastructure and production gains momentum; increased industrial activity then drives energy consumption, transmitting to downstream chemicals; finally, cost pressures gradually manifest in agricultural products. Thus, the recent adjustment in precious metals naturally directs market attention to the next potential baton-holder—the non-ferrous metals sector.
From a performance perspective, the non-ferrous metals sector showed strength throughout 2025, with significant gains for the year. Although recent sentiment around precious metals caused some adjustment, its core logic remains intact. Long-term support factors primarily lie in two areas: rigid constraints on the supply side, as global major miners face resource depletion and underinvestment, leading to persistent disruptions for metals like copper, zinc, tin, and nickel; and structural engines on the demand side, with sectors representing "new quality productive forces"—such as AI, 5G communications, and big data centers—generating substantial metal demand. For instance, the demand pull from AI data center construction and grid investments on copper is widely viewed favorably by the market.
Particularly noteworthy, the core views of new Federal Reserve Chair Warsh provide macroeconomic support for this demand outlook. He posits that AI acts as a powerful deflationary force on the supply side, capable of systematically lowering the inflation anchor by boosting productivity. This theory supports a policy mix of "low rates, high growth, and stable prices," suggesting the Fed may not need to maintain a high-interest-rate environment to curb inflation. If this view becomes policy orthodoxy, it would benefit capital expenditure in growth industries like AI, thereby reinforcing demand expectations for related non-ferrous metals like copper, aluminum, and tin.
Therefore, the recent adjustment may not have overturned the upward logic for non-ferrous metals. For varieties closely linked to AI, future demand-side releases could hold even greater potential. The key going forward is to monitor capital flows. Recent experience shows that "stock-futures linkage" is a common feature in such markets, where capital often positions in the stock market first, subsequently reflecting in related futures prices. Investors might closely watch the fund flows and market performance of non-ferrous metals ETFs, as they could serve as leading indicators for the next market move.
Beyond cyclical rotation clues, two directions more fundamental to the economy—real estate and consumption—also warrant attention.
The real estate sector has undoubtedly been a drag on economic growth recently, with its extensive upstream and downstream linkages affecting dozens of industries. Meanwhile, consumption, as the most fundamental pillar of the domestic economy, remains a key focus for policy support. Therefore, for the full-year economy to achieve genuine stabilization and recovery, improvement in these two key areas is essential: real estate needs to gradually reduce its drag on the overall economy, while consumption must continue to exert positive拉动 under policy guidance aimed at "expanding domestic demand." Let's examine the current state and potential opportunities in each.
Signs of marginal improvement are emerging in real estate. Although the sector overall remains in a prolonged, multi-year bottoming process, recent micro-level changes suggest that extreme pessimism may be subtly shifting. Unlike past rebounds primarily reliant on strong policy stimulus, current positive changes may stem more from internal factor improvements.
1. Transaction volumes are picking up: Activity in the secondary housing market in key cities has improved. For instance, Shanghai's secondary home transaction volume in January 2026 stood above 22,000 units for the third consecutive month, showing significant year-on-year growth. Beijing's online signing volume has also remained at relatively high levels for several months. Anticipation for a post-holiday "small spring" rally is growing. After prolonged price declines and market stagnation, whether driven by博弈心态 regarding policy and seasonal effects or restored confidence in housing needs, warmth is beginning to stir beneath the icy surface.
2. The pace of listing price declines is slowing: Although listing prices in the national secondary market remain in a downtrend, the rate of decline is decelerating. This indicates seller sentiment may be stabilizing, with less urgency for sharp price cuts, suggesting the market could be entering a stabilization phase where time is traded for space.
3. Asset returns are becoming attractive: As prices adjust and rents rise, residential rental yields in some cities have recovered to levels接近 or even covering low financing costs. For genuine owner-occupier demand, the long-term value of purchasing property may be starting to emerge.
Beyond spontaneous market warming signals, positive policy changes have emerged. Recently, Shanghai initiated a pilot program for purchasing second-hand homes for public rental housing, injecting real liquidity by having state-owned enterprises directly buy existing inventory. Simultaneously, regulators have ceased requiring monthly reporting of the "three red lines" metrics, effectively retiring this policy that strictly limited sector leverage. This helps ease financing constraints for developers and enhances capital activity. These measures collectively signal a marginally warming policy stance, potentially attracting more capital to focus on the recovery opportunities within the real estate sector.
Corresponding recent market performance shows the real estate sector displaying resilience. Although not leading gains, its weekly charts have quietly broken away from a four-year downtrend line, showing relatively stable overall movement. Notably, against a backdrop of significant net outflows from broad-based ETFs in January, ETFs representing real estate saw inflows, and again demonstrated notable resistance to declines during today's session, falling less than the broader market. As market logic shifts, the perspective through which capital views real estate may also change.
If the real estate sector indeed stabilizes and recovers, which futures varieties might benefit? Should real estate enter a stabilization and repair channel, varieties closely linked to its downstream demand in the futures market may see improved fundamental expectations, bringing to mind products like rebar, PVC, and glass.
Firstly, rebar is highly correlated with the macroeconomic cycle. In the current environment of gradual economic transition and stabilization, the overall atmosphere is already somewhat warm. More importantly, rebar inventories are near their lowest levels for the same period in nearly five years, indicating relatively eased supply-side pressure. Coupled with the rebar weighted index valuation remaining at relatively low levels since 2021, any improvement in the real estate sector, which accounts for a major portion of its demand, could provide room for price recovery.
Another variety, PVC, has been suppressed for a long time by a loose supply-demand balance, with prices trending weakly for nearly half a year—this "weak reality" has not fundamentally changed. However, after deep price declines and repeated trading of negative factors, the market is beginning to focus on potential marginal supports. Short-term, adjustments to export tax rebate policies might trigger "rush-to-export" expectations, providing some demand-side boost. Medium-to-long-term, the industry's transition to mercury-free processes will systematically raise production costs. Additionally, seasonal maintenance after the Spring Festival could lead to a phase of unexpectedly tight supply due to the preceding significant declines. While these factors may not immediately reverse the overall supply-demand trend, they could offer a window for stabilization or even a rebound for currently low prices.
Finally, there is glass, which indeed does not carry high valuations and also faces supply-side uncertainty due to "anti-internal competition" policies. The first quarter is typically a period for production cuts and maintenance in the glass industry. This year, some production areas, like Hubei, face cost increases due to production line upgrades. It's important to note that demand for glass typically materializes in the later stages of the real estate construction cycle, whereas rebar demand appears earlier. Therefore, if the real estate market warms, its positive impact might be reflected in rebar prices sooner, before gradually transmitting to glass.
Beyond real estate, the consumption sector is another area of focus. While monitoring the real estate chain, consumption, as the core lever of "expanding domestic demand" policies, also commands market attention. Consumption recovery is often more directly linked to chemical products downstream in the industrial chain. The chemical sector currently has low overall valuations and previously saw concentrated position-building and price increases as capital sought value.
If domestic demand recovers, one of the first areas to be stimulated could be packaging—as virtually all goods require packaging for protection and transport. Related chemical products mainly include pulp, polypropylene (PP), and polyethylene (PE).
For pulp, fundamentals remain weak, with the pattern of high inventories and soft demand yet to change. Port inventories remain at historically high levels above 2 million tons, and pre-holiday stockpiling by downstream paper companies has largely ended, keeping demand subdued. This "weak reality" is difficult to reverse shortly. Future improvement may require waiting for demand stimulation from a rate-cutting cycle or seeing a substantive reduction in port pressure.
For olefins (PP/PE), the market is currently caught between two conflicting influences: profit recovery expectations driven by "anti-internal competition" policies, and support on the energy cost side from geopolitical risks in regions like Iran. After a rebound in January, market sentiment improved somewhat, but the sector still faces realities of high supply pressure, elevated social inventories, and weak demand in traditional areas, leaving some varieties like polypropylene in a loss-making state. Short-term, prices may face pressure and volatility due to high post-holiday inventories and fading geopolitical premiums. However, if "anti-internal competition" policies can be effectively implemented after Q2, aided by the peak season and maintenance periods, leading to improved supply-demand dynamics, the olefins sector could present more noteworthy medium-to-long-term allocation opportunities.
As the Lunar New Year approaches, market trading tends to thin, and major funds often enter a lull. Significant unilateral trends are unlikely before the holiday. Rather than chasing scattered short-term fluctuations, this relatively calm period can be used to carefully梳理 the logic and potential of various sectors, making full preparations for post-holiday positioning and waiting patiently for opportunities.
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