International gold prices have experienced sharp fluctuations recently, with intense battles between bulls and bears. On May 19, COMEX gold plummeted by $72, a drop of 1.56%, breaking below the $4,500 mark. The decline continued on May 20, with prices hitting a low of $4,455.1 per ounce, the lowest since April. As of 11:00 AM on May 21, with selling pressure easing, gold prices saw a slight rebound, temporarily settling at $4,542 per ounce. The drop below $4,500 per ounce is attributed to a combination of factors, including shifting market expectations for Federal Reserve monetary policy, rising U.S. Treasury yields, easing geopolitical tensions, and concentrated selling. This suggests gold prices may remain volatile and search for a bottom in the short term, but the underlying bullish logic for medium to long-term gains remains intact, according to Xu Yaxin, a researcher at the Beijing Gold Economic Development Research Center. UBS has turned significantly bearish on silver, sharply lowering its price forecast and its 2026 supply deficit expectations. Following the report, silver prices entered a correction phase, with a notable single-day decline. Senior gold analyst Shen Jingcai noted that UBS's downward revision has exacerbated market bearish sentiment, particularly against a backdrop of profit-taking at high levels and macroeconomic pressures. Silver's decline results from a mix of macroeconomic, supply-demand, and technical factors. Short-term volatility remains high, while long-term prospects are supported by industrial demand and correlation with gold prices. The specific trajectory will depend more on inflation levels, Federal Reserve policy direction, and actual supply-demand data. Amid significant volatility in international gold prices, the Shanghai gold night session experienced an instantaneous sharp drop, drawing widespread attention. Market data shows that during the night session on May 19, the main Shanghai gold futures contract AU2606 plunged sharply, with a maximum decline nearing 17%, hitting a low of 830.52 yuan per gram, close to the 830.48 yuan per gram跌停 limit. However, following the anomaly, market prices quickly rebounded and recovered, with volatility subsiding rapidly. The instantaneous剧烈波动 in the main Shanghai gold contract AU2606 during the May 19 night session was primarily due to the full execution of a large sell order placed by a client. Such occurrences are relatively偶然性. At that time, the market lacked sufficient liquidity during the corresponding period, and the large sell order瞬间抽空 market buy orders at lower price levels, creating a momentary vacuum in buy-side interest, which led成交价 to approach the跌停 limit, explained Galaxy Futures analyst Yuan Zheng. Yuan Zheng also noted that such events are generally罕见, especially for a globally priced, highly liquid commodity like gold futures. Only a significant operational error by a large volume of funds could trigger this level of market movement, and the market was able to quickly correct the mispricing afterward. Therefore, this sharp drop in Shanghai gold prices is not directly related to a "fat finger" error. Currently, global stock markets have shown some脱敏 to the stalemate in U.S.-Iran negotiations, but commodities like gold, silver, and crude oil are still subject to ongoing短期扰动. In particular, as oil and gas prices rise, inflationary pressures are beginning to emerge in various countries, which is bound to increase expectations for central bank rate hikes in the medium term, which is unfavorable for gold and silver trends, added Xu Yaxin. On May 20, the latest Federal Reserve meeting minutes revealed that most officials believe if the U.S.-Iran conflict continues to push inflation higher, further rate hikes may become necessary in the future. Although the Federal Open Market Committee (FOMC) decided to keep the benchmark rate unchanged in the 3.5%–3.75% range at its most recent meeting, internal divisions over the policy path have明显加剧. The meeting recorded four dissenting votes, the highest number since 1992, highlighting the increasingly complex policy博弈 within the Fed against the backdrop of the Middle East conflict, soaring energy prices, and重新升温 inflation risks. Furthermore, according to CME's "FedWatch Tool," the probability of the Fed maintaining rates unchanged by June is 97.3%, with a 2.7% chance of a cumulative 25 basis point rate cut. By July, the probability of holding rates steady is 87.2%, with a 2.4% chance of a cumulative 25 basis point cut and a 10.4% chance of a cumulative 25 basis point hike. Public data shows U.S. CPI rose 3.8% year-over-year in April, and PPI increased 6% year-over-year, both significantly exceeding expectations,彻底扭转 market expectations for rate cuts earlier this year and raising the probability of a rate hike within the year to 50%. Meanwhile, incoming Fed Chair Walsh has a鲜明 hawkish stance, and Fed officials have集体释放 signals of 'maintaining high rates for a long time, not ruling out hikes,' stated Xu Yaxin. Yuan Zheng also noted that current market expectations are primarily for a hawkish Fed monetary policy. Market expectations have shifted from anticipating one or two rate cuts within the year before the U.S.-Iran conflict to now expecting rate hikes. Moreover, with the new chair taking office, his monetary policy governance style will必然 differ significantly from Powell's. Recent statements from Fed officials like Kashkari and Goolsbee have been总体偏鹰. While other officials have spoken less, the latest dot plot shows a逐步分化 between officials supporting hikes and those supporting cuts, indicating极大分歧 within the Fed. As former Fed Chair Powell's term nears its end, from a governance style perspective, Powell placed greater emphasis on communication with the market and expectation management. The Fed also issued monetary policy guidance reports through tools like the dot plot, allowing the market to form relatively accurate expectations regarding rate hikes and cuts. In terms of balance sheet management, the Fed's balance sheet size saw明显增长 during Powell's tenure, a point criticized by successor Walsh, who believes the Fed has assumed过多的财政职责, which has在一定程度上扭曲 market pricing, especially by suppressing long-term Treasury yields at low levels, Yuan Zheng explained. However, Yuan Zheng added that the new Fed chair advocates for a policy mix of rate cuts and balance sheet reduction, potentially using balance sheet reduction to create room for rate cuts. Based on current market expectations and his previous responses during Senate confirmation hearings, inflation levels have exceeded his acceptable range, making rate cuts difficult to implement. On balance sheet reduction, his stance is相对明确. Therefore, if Walsh adopts aggressive balance sheet reduction operations early in his tenure, it could not only lead to剧烈的市场波动 but also face significant political pressure. Thus, he is more likely to achieve相对柔和的缩表 through measures like asset duration management and gradually reducing the scale of asset rollovers. As gold prices continue to fluctuate, the influencing factors are drawing attention. In the short term, investors need to monitor the direction of the U.S.-Iran situation and Walsh's statements after taking office, with the U.S.-Iran situation having a greater impact. If the U.S. and Iran go to war again, oil prices may continue to rise, impacting global risk assets. Meanwhile, the Fed may pivot towards rate hikes,短期内抑制 gold and silver prices, stated He Yi, an analyst at Chuangyuan Futures. However, He Yi added that if a U.S.-Iran ceasefire and peace talks occur, the Strait of Hormuz reopens, and oil prices fall, liquidity concerns may ease, and the market may no longer expect Fed rate hikes, potentially leading to a rebound in gold and silver prices. Currently, implied volatility in gold and silver options remains in a高位回落 trend. Short-term, gold and silver may continue震荡降波, but medium to long-term prospects for both remain看好. Looking ahead, Xu Yaxin stated that international gold prices will remain under pressure in the short term. After breaking below $4,500 per ounce, there is still buy-side support around $4,400 and $4,300 per ounce, with a significant low point at $4,098 per ounce on March 23. Although many investment banks have lowered their future gold price targets, many institutions still believe the foundation of this gold bull market has not been truly颠覆. Among them, JPMorgan Chase, in a recent report, lowered its year-end international gold price target from $6,300 to $6,000 per ounce, noting that if the Strait of Hormuz reopens in the future, gold prices could rebound and challenge the key technical levels of $4,900–$5,100 per ounce. Meanwhile, Shen Jingcai also noted that this round of correction in international gold prices is expected to stabilize around $4,400–$4,600 per ounce, with the $4,200–$4,400 per ounce region acting as strong support. Due to high volatility and profit-taking, silver may test levels around $65–$70 per ounce in the short term, but in the long run, both remain in a结构性牛市, with看好 medium to long-term prospects for gold and silver. In the current environment of high volatility and unclear trends, Shen Jingcai建议 investors adopt a 'defense为主,逢低布局' strategy, maintaining light positions观望 and avoiding盲目抄底. The market is currently in an adjustment period dominated by tightening expectations, and gold and silver prices lack clear上涨催化剂. It is advisable to保持耐心 and wait for明显的企稳 signals at the aforementioned key support levels before considering entry. Furthermore, investors can also分批建仓,严控仓位. For long-term investors, when gold prices pull back to $4,500 per ounce or silver prices approach $70 per ounce, consider尝试小仓位,分批次布局多单. Avoid一次性满仓 to prevent极端插针行情 caused by liquidity risks.同时,尽量规避杠杆 and关注实物, ETF等产品的投资机会, added Shen Jingcai.
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