According to a research report from CICC, on January 14, the Trump administration announced a suspension of its tariff decision on critical minerals, which may lead to a cooling of speculative sentiment in the precious metals market. Looking ahead, the pace of the rise in the central price of gold this year may be more stable. Current market pricing for Federal Reserve interest rate cuts appears cautious, potentially creating a buying opportunity for gold after adjustments. The core contradiction in the silver market remains the uneven distribution of regional inventories and the unresolved tariff policy. Its future success or failure may hinge on these tariffs, with price elasticity and volatility risks likely remaining higher. CICC's main views are as follows:
Intertwined tariff expectations and safe-haven demand have resulted in unexpectedly resilient precious metal prices. Prices for precious metals like silver and gold have broken out strongly since last December. Beyond the implementation of monetary easing policies such as Fed rate cuts and balance sheet expansion, silver's larger gains were primarily driven by inventory tightness during the delivery period. Following the short squeeze, price adjustments since the start of the year have not been as smooth as expected. This market resilience is likely supported by three main factors: First, London silver inventories remain insufficient. By the end of last year, LBMA silver inventories rose to 27,800 tonnes, an increase of 631 tonnes from the end of November. However, as silver ETFs in Europe and the US also increased their holdings during the same period, the actual available inventory only roughly matched the amount locked by ETFs (approximately 27,700 tonnes), indicating no substantive easing of inventory pressure. Second, the market anticipated the imminent implementation of US tariff policies on critical minerals. The final report of the Section 232 investigation on critical minerals was originally due in October 2025, after which the Trump administration would have 90 days to decide on tariffs, setting a deadline around mid-January 2026. While awaiting this decision, physical delivery demand for COMEX silver futures has been high since January, with cumulative deliveries from the 1st to the 15th reaching 1,277 tonnes, far exceeding typical off-season levels. Third, frequent global macroeconomic surprises have led to a resurgence in safe-haven trading. From geopolitical risks in regions like South America and the Middle East to the investigation into Powell and renewed concerns over the independence of the Fed's monetary policy, safe-haven trades have supported investment demand for precious metals. This week, the SPDR Gold ETF saw an increase of approximately 21 tonnes, coinciding with rising oil prices and a higher VIX index.
The Trump administration's confirmation of the suspension of silver tariffs may cool short-term sentiment. Reviewing 2025, global silver exchange inventories accumulated an increase of 4,944 tonnes, the largest annual increase since 2018. Specifically, COMEX silver inventories increased by 4,068 tonnes, largely due to significant stockpiling early in the year over tariff concerns. After a net outflow in Q1 2025, LBMA inventories were replenished during the Q4 short squeeze, resulting in a net annual inflow of 2,078 tonnes. The inventory tightness is relative to the also substantially increased ETF holdings. Domestically, combined silver inventories at the Shanghai Futures Exchange and the Shanghai Gold Exchange saw a net outflow of 1,202 tonnes. Therefore, from a balance perspective, excluding investment demand, the global silver market may not be facing a supply-demand shortage. CICC believes that since the second half of last year, the core contradiction for silver has been the uneven regional inventories and the unresolved tariff risk, which are also the main reasons for the heightened investment sentiment and significantly larger price increases compared to gold. The January 14th announcement by the Trump administration to suspend the tariff decision on critical minerals, stating the need to ensure stable supply and continue negotiations with major trade partners while considering measures like import price floors, with an updated report required within 180 days, suggests that while the possibility of future tariffs on silver is not entirely eliminated, near-term trade disruption risks may decrease, indicating a potential cooling of speculative market sentiment.
Cautious market pricing for rate cuts may present a gold buying opportunity after adjustments. Looking forward, CICC believes that the rise in the central price of gold this year may be more stable than that of silver, with short-term adjustments potentially offering buying opportunities. The US employment data from December did not show significant deceleration, and coupled with the Powell investigation, relatively mild inflation data has not altered the market's consensus for a Fed pause on rate cuts in January. According to CME data, current market expectations for rate cuts in March and April remain cautious. If geopolitical risks do not escalate further, this could exert some short-term pressure on gold. However, compared to silver, gold's adjustment room is relatively limited and is expected to form a favorable buying opportunity. For the year ahead, the Fed still has room for monetary easing, and the People's Bank of China has continued to increase its gold reserves for 14 consecutive months, suggesting that cyclical and structural opportunities in the gold market may still be anticipated. For silver, inventory concerns and tariff risks are not fully resolved, indicating that its fate may hinge on tariffs, with price elasticity and volatility risks likely remaining higher.
Risk warnings include geopolitical risks, uncertainty in tariff policies, US economic data exceeding expectations, and unexpected Fed monetary policy changes.
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