China Post Securities: The Fed's rate cut may exceed expectations, and metal prices are generally rising.

China Postal Securities released a research report stating that last week, gold hit a new high, with a retracement in recession expectations. Gold rebounded following oil, and silver benefited more from the slowdown in recession. In the short term, the interest rate reduction trade has basically ended, and attention still needs to be paid to the economic data situation in the United States. If the inflation expectations decline too quickly, it is expected that gold will also experience some fluctuations, with the upward trend being volatile rather than smooth sailing. At the same time, continue to be bullish on the gold-silver ratio. On the other hand, the main variable affecting the future trend of copper prices is the inflation expectations in the U.S. If the recession occurs too quickly, even if the interest rate reduction expectations are strong, it may still be more harmful than beneficial for copper prices. The upward cycle of copper may have to wait for a period of time after the Federal Reserve substantially lowers interest rates. The main points of China Postal Securities are as follows: Precious metals: Gold hits new high, silver follows Last week, gold hit a new high, with a retracement in recession expectations. Gold rebounded following oil, and silver benefited more from the slowdown in recession. In the end, COMEX gold rose by 3.14% last week, and silver rose by 9.89%. China Postal Securities believes that in the long term, the increase in the U.S. deficit, geopolitical disturbances, and the nearshoring of the U.S. supply chain will lead to unchanged logic for central banks to purchase gold. In the short term, the interest rate reduction trade has basically ended, and attention still needs to be paid to the economic data situation in the United States. If the inflation expectations decline too quickly, it is expected that gold will also experience some fluctuations, with the upward trend being volatile rather than smooth sailing. At the same time, continue to be bullish on the gold-silver ratio. Copper: Bullish on gold-copper ratio, downturn in copper is not over yet, recession expectations may return at any time Last week, LME copper prices rose by 3.38%, following a rebound in oil prices. The main variable affecting the future trend of copper prices is the inflation expectations in the U.S. If the recession occurs too quickly, even if the interest rate reduction expectations are strong, it may still be more harmful than beneficial for copper prices. The upward cycle of copper may have to wait for a period of time after the Federal Reserve substantially lowers interest rates. Historically, a slow decline in interest rate expectations is difficult to quickly increase inflation expectations. Overall, last week's rise is more likely to be a rebound rather than a reversal, while still maintaining the judgment that copper is unlikely to outperform precious metals in H2 2024. Lithium: Rumors of reduced production by Contemporary Amperex Technology lead to a rebound in prices Last week, lithium carbonate rose by 2.34%, mainly due to rumors of reduced production at Contemporary Amperex Technology's Jiangxi Mica Mine. However, even if the production reduction takes place, the overall impact is limited. Additionally, if the price of lithium carbonate rebounds to above RMB 90,000 per ton, high-cost mines may have a motive to resume production, thus limiting the extent of price increases. Tin: Macroeconomic factors drive tin prices up, Indonesian tin exports return to normal Last week, tin prices rose by 3.03%, mainly supported by the release of the U.S. CPI data in August, which supported expectations of a rate cut by the Federal Reserve next week and boosted global risk appetite. In terms of inventory, domestic social/futures inventories of refined copper decreased by 3.56%/2.08%, while LME inventories increased by 0.85%. On the supply side, the operating rates of refined copper smelters in Yunnan and Jiangxi remained low, Indonesian refined tin exports in August were 6,436.27 tons, a year-on-year increase of 29.12% and a month-on-month increase of 88%, basically returning to normal levels in previous years. In terms of demand, according to SMM's research, the output of tin solder in August for domestic sample companies decreased by 1.64% compared to July, and consumption in September is expected to pick up during the peak season. Aluminum: Strong short-term support from fundamentals, destocking exceeds expectations Last week, aluminum prices rose by 5.62%, with social inventory of electrolytic aluminum exceeding expectations by 7.50%. On the supply side, domestic electrolytic aluminum operations remained stable, with no news of power resumption from capacity awaiting resumption in Guizhou and Sichuan. An unexpected fire accident occurred at Malaysia's Qi Li Aluminum Industry, according to the company's related announcement, the accident caused 100 electrolytic cells in the third phase of the aluminum plant to stop operations, and the recovery time may require 4 months, affecting an annual production capacity of approximately 100,000 tons of aluminum, with a monthly reduction of approximately 8300 tons, but there are still rumors circulating that the entire third phase of the 320,000-ton aluminum plant has stopped production. In terms of demand, aluminum processing companies maintain a growth trend as aluminum plate and foil transition to peak season, architectural profiles also show signs of improvement, aluminum cables are in a concentrated delivery period, with strong short-term support for aluminum prices from fundamentals. Investment advice: Recommend focusing on Zhongjin Gold Corp.,Ltd(600489.SH), Zijin Mining Group(601899.SH), Inner Mongolia Xingye Silver&Tin Mining(000426.SZ), Yunnan Tin Co.,Ltd.(000960.SZ), Lizhong Sitong Light Alloys Group(300428.SZ), CGN MINING(01164) and other stocks. Risk warning: Significant fluctuations in the macro economy, demand falling short of expectations, unexpected increase in supply, and project progress falling short of expectations.