**********On Tuesday morning (January 27th), spot gold fluctuated narrowly in the Asian market, currently trading around $2742.35 per ounce. The gold price fell about $30 (down about 1.1%) on Monday, falling back from the position near the historical high hit on the previous trading day and closing at $2740.87/ounce. It is a Chinese AI start-up companyDeepSeekThe shock wave triggered a broader market decline in the United States, prompting investors to sell their gold positions to cash out.
Global technology stocks fell. The popularity of China's low-cost artificial intelligence model DeepSeek has overturned investors' confidence in the profitability of artificial intelligence and the industry's huge demand for high-tech chips.
On Monday, the S&P 500 index fell 1.46% and the Nasdaq fell 3.07%. The Philadelphia Semiconductor Index fell more than 9%. Nvidia fell about 17%, with a daily market value evaporation of $589 billion, setting a record for the largest single day stock evaporation in history. Google fell more than 4%, Tesla, Microsoft, Intel fell more than 2%, and Netflix fell slightly.
Will Compernolle, macro strategist at FHN Financial, said: 'The news from DeepSeek has led to a rise in risk aversion in the US financial market.'. However, he pointed out that as Wednesday's Federal Reserve policy-making meeting approaches, the impact of this news has gradually weakened.
The sharp decline in global stock markets has driven the safe haven trend of other asset classes. The yield of treasury bond bonds fell to a three week low, and the dollar index hit its lowest level since December 18.
This (sell-off) is largely driven by the broad stock market, rather than being solely influenced by conventional interest rate or exchange rate factors, "said Bart Melek, head of commodity strategy at TD Securities." We have observed a certain degree of liquidity issues. Some investors may be forced to cash out in the market, perhaps due to the volatility of stocks they previously held through leverage or margin. Therefore, I believe this is a chain reaction caused by liquidity issues, with gold and other risky assets being sold off. "
The market strategy of Bannockburn Global Forex in New York is Marc Chandler, who said, "Many people were worried about the overvaluation of U.S. stocks, but the DeepSeek event made this concern exposed. The chain reaction it triggered was the decline in the yield of U.S. 10-year treasury bond bonds, which is the reason why safe haven currencies such as the yen and the Swiss franc have relatively strong performance."
The market is paying attention to the interest rate decision made by the Federal Reserve at the end of the Federal Open Market Committee meeting on Wednesday. The market generally expects the Federal Reserve to maintain the benchmark overnight interest rate in the range of 4.25% -4.50%, and market participants say it will undergo a "dovish pause".
Vincent Reinhart, Chief Economist of NYCB Investments, said, "The Federal Reserve will not take action without understanding the new government policies. They are in an awkward position in providing guidance. They cannot explain predictions that rely on certain government policies
According to calculations by the London Stock Exchange Group (LSEG), considering the latest sell-off in the stock market, the US interest rate futures market has priced this year's rate cuts at 51 basis points, meaning two cuts of 25 basis points each, up from 36 basis points late last Friday. For most of this month, the pricing in the interest rate market was only for one rate cut.
In addition, this trading day will also release the monthly rate of durable goods orders in the United States for December, which investors need to pay close attention to. Additionally, it is necessary to continue monitoring the latest developments related to Trump.
On Monday evening local time, Trump stated that he would consider imposing tariffs on drugs and steel; Tariffs will soon be imposed on semiconductors, as well as on aluminum and copper. The only way to get rid of tariffs is to build factories in the United States.
A Reuters survey shows that Trump's second term illuminates the bullish path for gold in 2025.
The survey suggests that despite the strengthening of the US dollarFederal Reserve cuts interest ratesExpectations have weakened, but during US President Trump's second term, increased economic uncertainty and inflation concerns will boost gold demand, and gold prices are expected to reach a historic high by 2025.
A survey of 36 analysts and traders shows that the median gold price forecast for 2025 is US $2756 per ounce, higher than the US $2674 forecast in the survey three months ago.
The spot gold price reached a historic high of $2789.95 per ounce in late October, and closed at $2740.87 on Monday. The average price of gold in 2024 is $2386.
In 2024, gold prices surged by 27%, marking the largest increase since 2010, making it one of the best performing assets of the year. Investors favor gold as a hedge against global risks, while the Federal Reserve's three interest rate cuts have also supported gold prices.
Independent analyst Robin Bhar said, "Geopolitical risks continue to ferment in multiple hotspots around the world, increasing inflation risks and driving safe haven demand for gold
During the period of November to December, the price of gold experienced some decline due to the sell-off after the US election and the Federal Reserve's December meeting. Federal Reserve policy makers lowered their expectations for a rate cut in 2025 at the meeting.
In January 2025, investors' concerns about the threat of Trump's import tariffs and the expectation that a potential trade conflict would push up inflation provided support for gold.
Analysts say that silver prices are expected to benefit from strong industrial demand, particularly in green technology and renewable energy sectors, but weak investment demand from exchange traded funds (ETFs) and the potential impact of tariffs on global economic growth may affect the outlook for silver.
Standard Chartered Bank analyst Suki Cooper said, "The silver market is expected to remain in short supply in 2025, but supply shortages alone are not enough to drive up the risk of silver prices." She added that investment demand has been struggling to keep up in recent months.
The survey predicts that the average silver price in 2025 will be $33.10 per ounce, lower than the previously predicted $33.75 but higher than the current $30.20.
At 08:05 Beijing time, spot gold is currently reported at $2742.04 per ounce.
