Trump’s much-anticipated visit to China came to a quiet close. China’s reception was high-level and formal, but after the visit, no joint statement was issued. Instead, the results were mainly reflected through the two sides’ separate communiqués. Compared with Trump’s 2017 visit, which produced a $253.5 billion deal package, this visit focused more on stabilizing the strategic relationship and restoring institutional channels. From the market’s perspective, the two sides agreed to mutual tariff reductions, and the U.S. opened up sales of Nvidia’s H200 chips. Trump also claimed that China had committed to purchasing $20 billion worth of Boeing aircraft and a large amount of U.S. soybeans. However, in the actual announcements, China did not provide any specific procurement figures. For the market, this was a result that fell short of expectations, and it was also the main reason behind last week’s correction in commodities. At the same time, the unsuccessful U.S.-Iran talks over the weekend kept oil prices elevated, and as the market looks ahead to the first appearance of the new Fed chair, concerns about monetary tightening remain strong.
Gold and silver are choosing direction, and the outlook is not optimistic
In last week’s post, I emphasized that gold and silver were moving around a key moving average that serves as an important dividing line between bulls and bears, meaning it was time for the market to choose a direction. As it turned out, gold fell 3.8% last week, while silver plunged more than 10% in a single day. This short-term direction has now become much clearer, and investors should pay attention to hedging or reducing positions. Gold may still make a new low and break below 4,000, while silver is likely to continue its highly volatile nature, with declines that may be more severe than many expect.
One thing worth mentioning is last week’s unexpected silver news, which is also worth learning from. Silver rose independently and outperformed gold last week because a power shortage in Peru forced mine operations to halt. If such news were to hit other commodities, the trend might last longer. But when it happens in silver, it must be treated with great caution. The reason is that although Peru has the world’s largest silver reserves and ranks second or third in production, mined silver is mostly a byproduct. It is usually associated with copper mines, lead-zinc mines, or gold mines. So a shutdown in Peru also means shutdowns in other metals. If silver rises independently on this kind of news while other metals show little reaction, it indicates that the move in silver is highly speculative. If the news does not continue to intensify, the price trend can reverse sharply. I hope last week’s silver move can serve as a lesson for the future.
U.S. stock indexes finally pulled back — is the May effect a correction or a reversal?
The market had expected that after Trump’s China visit and the U.S. easing restrictions on chip purchases, China would buy large quantities of Nvidia’s H200 chips to support its domestic AI development. But in the end, there was very little concrete information from the Chinese side, which reduced market optimism. Going forward, it will be important to watch the actual pace of China’s chip purchases. Although U.S. stock indexes saw a modest pullback because the visit produced fewer results than expected, they have already risen significantly since April, so a small technical correction is perfectly normal. In the short term, the 20-day moving average should be used as the main tracking benchmark. As long as that level has not been broken, there is no need to make excessive defensive adjustments. U.S. stock indexes are still one of the strongest assets in the financial markets, even stronger than crude oil, so it is enough to keep watching closely.
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