According to a report from Zhitong Finance APP, guest analyst Li Gangfeng of the European Natural Resources Fund stated that market expectations for whether the Federal Reserve will raise rates in October have risen from a previous fifty-fifty split to nearly seventy percent as of last Friday.
However, since there is still nearly a month from now until the October 28 policy meeting, many data points could change expectations.
From a rational perspective, after the Fed raised rates in September, if it were to hike again just six weeks later at the October meeting, it would inevitably give the impression of being overly hasty. From a human nature perspective, the Fed has previously indicated that central bank forward guidance should become more blurred. If the market expects the Fed to raise rates every time simply because officials make hawkish remarks, that may not align with operational logic.
Therefore, he believes the possibility of keeping rates unchanged in October still exists, and the key remains whether inflation data performance can cooperate. If rates are not raised in October, there is a relatively high probability of another hike in December or January next year.
In that case, the current strength in the precious metals sector is likely to continue until the end of October, and begin to gradually weaken starting in November. Since Li Gangfeng believes current oil futures prices are undervalued and the risk of a sharp rise in global food prices next year is increasing, the first quarter to first half of next year may be when the Fed further accelerates rate hikes, until the "aftereffects" of rate hikes gradually emerge in the second half of next year, when the market may begin to expect the US to start cutting rates in 2028.
Data source: CFTC/LSEG Workspace. For ease of comparison, COMEX gold metal equivalent is divided by 10, and COMEX silver metal equivalent is divided by 100. The current Nymex palladium reference value is very low.
As of September 22, fund net longs in US futures silver, platinum, and copper all rebounded across the board. Palladium contracts, after experiencing six consecutive weeks of fund net long levels, have now been in fund net short for the 28th consecutive week as of last Tuesday. US futures gold fund longs fell 5% month-on-month to 433 tons; fund shorts fell 9% month-on-month to 25 tons, the lowest level in the past 87 weeks, so fund net longs fell 4% month-on-month to 408 tons. Silver fund longs fell 3% month-on-month to 2,945 tons; fund shorts fell 15% month-on-month to 921 tons, the lowest level in the past 12 weeks, so fund net longs rebounded 3% month-on-month to 2,024 tons. Platinum fund longs rose 8% month-on-month to 29 tons; fund shorts rose 9% month-on-month to 14 tons. Fund net longs rose 7% month-on-month to 15 tons.
Fund net longs in US futures gold are up 4% year-to-date (2025 cumulative decline of 30%). Data source: CFTC/LSEG Workspace. Fund net longs in US futures silver are down 22% year-to-date (2025 cumulative decline of 1%). Data source: CFTC/LSEG Workspace. Fund net longs in US futures platinum are up 140% year-to-date (2025 negative turned positive). Data source: CFTC/LSEG Workspace. Fund net longs in US futures copper are up 17% year-to-date (2025 negative turned positive). Data source: CFTC/LSEG Workspace.
Even though fund net long positions in gold contracts in the 2025 US futures market have contracted, gold prices still rose 64.4%, reflecting that physical demand far exceeds the futures market, which uses leverage to drag down gold prices. In the past, capital controlled metal prices through the futures market. For example, since the pandemic spread globally in 2020, net longs in precious metals futures have continuously declined, reflecting that funds had a purposeful intent to prevent precious metals from rising. However, starting in the first quarter of this year, futures funds began closing long positions to take profits, yet gold prices remained elevated, reflecting that physical demand far exceeds futures market leverage.
The CFTC weekly report for US copper began in 2007. Since copper was in a bear market from 2008 to 2016, it is not surprising that US copper futures have historically been mostly in net short territory. However, starting in 2020, because the global pandemic outbreak affected the supply side and mine operations, combined with market expectations of strong copper demand from AI and new technology development, copper prices were driven higher, even reaching new historical highs.
In addition to gold's safe-haven properties, geopolitical tensions may push oil prices higher, and China's monopoly position in the supply of key materials such as rare earths, antimony, and tungsten is also expected to support their international prices (not domestic prices) strengthening. The US government not only took a stake in MP Materials but also signed a 10-year supply contract with them, with a minimum price nearly double China's selling price (US$110 per kilogram) to buy neodymium praseodymium. The stock price surged on the news. Recently, news emerged that the US Department of Defense wants to acquire cobalt metal overseas. Subsequently, the US government took stakes in Lithium America and Trilogy Metals and provided funding to Nova Minerals, all of which caused these companies' stock prices to soar. In addition, major gold producer Agnico Eagle stated it will use US$130 million to establish a new subsidiary for investing in strategic resource-related projects.
Li Gangfeng updated the gold price-to-gold miners ratio indicator, which has important short-term implications for the short-term direction of gold prices. Last week, the USD gold price/North American gold miners ratio rebounded: Data source: LSEG Workspace. As of Friday (the 25th), the gold price/North American gold miners ratio was 11.177X, up 0.7% from 11.095X on the 18th, and down 11.3% year-to-date. When the market is optimistic about metals, mining stocks outperform physical metals; conversely, when sentiment turns pessimistic, physical metals outperform. In 2025, it fell 34.1% year-to-date, with North American gold miners outperforming physical gold. In 2024, it rose 16.5%. In 2023, it rose 13.2% for the full year (2022: +6.4%). As a historical comparison, before 2008, the USD gold price/North American gold miners index ratio was only below 6X. In other words, if gold prices remain unchanged, and the ratio falls from the current nearly 11X to 6X, the potential upside for the North American gold miners index would be 81%. In fact, since 2009/2010, mining stocks have consistently lagged behind commodities themselves, and in recent years even oil/natural gas production companies have shown similar patterns. Li Gangfeng believes the reason is the rise of ESG (environmental, social, and corporate governance) focus in the investment community. For example, in 2021, Blackrock committed to the UK Parliament that it would no longer invest in coal mining and crude oil production companies, and they are certainly not the only fund company committed to investing only in funds and industries that place greater emphasis on ESG. Li Gangfeng believes that tracking overseas gold mining stock prices is one of the more reliable forward-looking tools — that is, if gold prices continue to rise but gold mining stocks suddenly plunge, caution is warranted.
The gold-silver ratio is one indicator for measuring market sentiment. Historically, the gold-silver ratio has operated in a range of approximately 16-125X: Data source: LSEG Workspace. Generally, the more panicked the market, the higher the gold-silver ratio. For example, in 2020, because COVID-19 spread globally, the gold-silver ratio once broke above 120X, a historic high. Silver rose 147% in 2025. Last Friday, the gold-silver ratio index was 66.68, up 0.9% month-on-month, and up 10.1% year-to-date. In 2025, it fell 33.4% year-to-date; in 2024, it rose 13.0%; in 2023, it rose 9.1% cumulatively.
Platinum rose 127% in 2025, but historically, one ounce of platinum on average could be exchanged for more than 60 ounces of silver, while recently 1 ounce of platinum can only be exchanged for 27.662 ounces of silver, at a historic low (down 31% from the 2025 June peak; the lower the ratio, the cheaper platinum is relative to silver), reflecting that platinum is currently the cheapest valuation in history relative to silver. Data source: LSEG Workspace.
The market estimates nearly seventy percent probability of a US rate hike in October. The market believes the probability of the Fed raising rates by 0.25% on October 28 has risen from 53.1% two weeks ago to 68.6% last Friday: Image source: LSEG Workspace. Currently, the market has renewed its view that the probability of a US rate hike this year has risen again compared to before, with the probability of a December rate hike rebounding from 73.5% two weeks ago to 93.4% last Friday.
Li Gangfeng has repeatedly emphasized that futures market positioning usually has higher reference value for predicting short-term US interest rates, but its accuracy is poor over longer periods (half a year or more). However, this time the "professional market participants" view no longer has cross-month predictive reference value.
Market expectations for whether the Fed will raise rates in October have risen from a previous fifty-fifty split to nearly seventy percent as of last Friday. However, since there is still nearly a month from now until the October 28 policy meeting, many data points could change expectations. From a rational perspective, after the Fed raised rates in September, if it were to hike again just six weeks later at the October meeting, it would inevitably give the impression of being overly hasty. From a human nature perspective, the Fed has previously indicated that central bank forward guidance should become more blurred. If the market expects the Fed to raise rates every time simply because officials make hawkish remarks, that may not align with operational logic. Therefore, Li Gangfeng believes the possibility of keeping rates unchanged in October still exists, and the key remains whether inflation data performance can cooperate. If rates are not raised in October, there is a relatively high probability of another hike in December or January next year. In that case, the current strength in the precious metals sector is likely to continue until the end of October, and begin to gradually weaken starting in November. Since Li Gangfeng believes current oil futures prices are undervalued and the risk of a sharp rise in global food prices next year is increasing, the first quarter to first half of next year may be when the Fed further accelerates rate hikes, until the "aftereffects" of rate hikes gradually emerge in the second half of next year, when the market may begin to expect the US to start cutting rates in 2028.
Regarding high inflation while US Treasuries are simultaneously at historic highs, how should the market interpret the outlook for the dollar and US Treasuries (in a stagflation environment)? Additionally, current market sentiment still dominates investment markets including commodities. For example, in August precious metals surged, and other metals were also driven higher, even though various metals have their own fundamentals. For instance, Western politicians have consistently advocated for self-sufficiency in strategic metals. Li Gangfeng believes from a fundamental perspective that even if US interest rates continue to rise, governments will still invest resources to develop the entire strategic resource supply chain. However, the current mainstream view among Western institutional investors is still that the strategic resource sector is overly speculative, mostly supported by retail investor funds alone (or these institutions have long seen through the true nature of Western politicians who "only talk but do not act"). Copper prices have only retraced relatively little from this year's highest point. Considering short, medium, and long-term investment perspectives, it may be more appropriate to shift from some precious metal assets to cash and copper-related (equities).
The market widely believes that copper mine projects are facing a supply gap, and from this year onward for many years, demand will exceed mine supply, with demand growth mainly coming from new energy and high-tech industries. Li Gangfeng believes copper prices (though he is not certain whether it will happen this year) will rise to at least US$8-10 per pound. In addition, the contract price of uranium, the raw material for nuclear power generation, has quietly approached US$95, while the spot price remains solidly at US$85. Li Gangfeng believes that for investors with long-term patience, holding (Buy & Hold) uranium investment trusts now has a higher probability of success than holding gold ETFs.
Li Gangfeng has always believed that the global economy will most likely enter stagflation, so he is bullish on commodities and bearish on the bond market. Previously, the market paid relatively little attention to the US debt problem because its economic growth was strong, but as the economy has slowed in recent years, the debt problem has become a market focus, the dollar has weakened, and commodity prices have risen accordingly. However, judging from May's US new job data, on the surface it is not difficult to conclude that US economic growth is starting to accelerate. Although the job data contains some "padding," it still takes time to prove that the US economic slowdown is only temporary. Before clear evidence emerges, commodity prices (especially gold) may continue to face pressure.
In the column, Li Gangfeng wrote: "As a veteran Western mining stock expert for many years, in addition to being bullish on precious metals mining stocks, since last year I have also been bullish on Western strategic and military metals exploration company stocks. The former relies on market sentiment — even though currency depreciation and de-dollarization are all supported by fundamental factors, the dollar/currency does not only fall and never rise. Market sentiment last year was about discussing rate cuts, this year it is about discussing whether the pace of rate cuts will narrow or even the idea of rate hikes lingering, and by the second half of this year perhaps rate cuts will be welcomed again. In contrast, strategic metals have the endorsement and financial support of Western governments. Under the current global atmosphere where politics trumps everything, both sectors can make their mark in the 'Warring States era' that the global economy has already entered."
Since the entire metals sector is rising this time, I believe that once a metals bear market arrives, it is very likely that all metals will enter a bear market together, rather than only precious metals entering a bear market while strategic metals remain in a bull market (in fact, strategic metal stocks have recently pulled back due to Middle East tensions). From a fundamental perspective, even if the US really raises rates, there is still no reason to see strategic metals falling into a bear market. And once strategic metals do not enter a bear market, other metals may not have the same previous gains, but that does not mean they will enter a bear market.
Estimating when gold and silver prices will bottom is just as difficult as estimating when gold and silver prices will peak. For friends participating in the futures market, given the current uncertain environment, it may be appropriate to do some long gold-silver ratio and platinum-silver ratio trades.
The main reasons for this round of gold and silver price declines are: after accumulating substantial returns, the precious metals market did indeed become overheated. Under major fundamental changes (oil prices may remain high for a long time), the market chose to take profits, and widely used technical analysis accelerated the decline in gold and silver prices; the market believes that with rising inflation, even in stagflation, the US central bank will only raise rates, without considering voters' feelings or whether rate hikes can truly address the problem.
Looking back at history, the first formal gold bull market ran from US$35 per ounce in 1970 to US$850 in 1980 (of course, the process was not a straight line up, but very volatile with highs and lows). During this period, the 1973 OPEC boycott of Western countries' crude oil export restrictions caused oil prices to rise from US$3 to US$12 per barrel, and the 1979 Middle East conflict stimulated oil prices to double to US$39.5, and two energy crises both reflected how geopolitical factors at that time pushed oil prices higher, high oil prices pushed inflation higher, and market capital flowed into gold as a safe haven. Subsequently, in 1980 the US did aggressively raise rates to suppress inflation and gold prices, but note: if you sold your gold in 1974, you would have missed the gold bull market that lasted until its end in 1980; at that time, US government debt to GDP was about 30%, so there was naturally room for large rate hikes, but now the ratio has risen to over 120%. If the US aggressively raises rates again, the gold bull market may not yet be killed, but US Treasuries would face even more severe pressure.
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