Minsheng Securities: The "Waterloo" of gold and silver?

date
14:45 22/10/2025
avatar
GMT Eight
Regarding the future trend, Minsheng Securities expressed a preference for a "short-term rebound of the US dollar + adjustment of gold, silver, and US stocks".
Minsheng Securities released a research report stating that there is often a big drop after a big rise, especially when the big rise is "incomprehensible". This is a classic rule of the capital market. This scene has also appeared recently in the hotly discussed gold and silver markets. Last night, gold futures plummeted nearly 6%, silver futures fell over 7%, marking the worst single-day performance in over a decade, and this is the second major drop after last Friday. Regarding the future trend, Minsheng Securities is more inclined towards a "short-term rebound of the US dollar + adjustment of gold, silver / US stocks". The main viewpoints of Minsheng Securities are as follows: If the previous rise can be explained by the excessive expectations of the Federal Reserve's inflation, the credit of the US dollar, and the government shutdown, the recent simultaneous rise of risk assets such as gold and stocks in the past one or two weeks without any fear of the US dollar rebound, has somewhat overturned traditional logic. As for the direct triggers last night, it is not very clear, but it may be due to the continuous easing expectations of geopolitical issues, such as the previous issue between China and the US, and the recent Russia-Ukraine issue. Although Europe and the US showed some easing in the territorial dispute between Russia and Ukraine yesterday, Russia did not accept it: Trump's public "suggestion" was for both sides of Russia and Ukraine to cease fire at the current frontlines and reach an agreement, declaring victory for each. Several European leaders issued a joint statement, expressing "strong support" for US President Trump's stance on the Ukraine issue, that Russia and Ukraine should immediately cease fire and use the current front line as a starting point for negotiations. Looking at the recent trends of gold and silver in the past few weeks, this major drop seems more like an emotional acceleration of the "ebb tide", especially in silver (London silver): Since last Friday, silver has experienced a two-day sharp drop, almost erasing the gains since October 9. This round of silver trends has a clear short-squeeze characteristic. Since October 9, after silver crossed the $50 mark, the market started paying attention to the shortage in the spot market. Subsequently, silver prices continued to surge, leasing rates surging to over 30%, intensifying the imbalance of supply and demand. After October 13, this round of "short squeeze" trend continued to accelerate until it hit a peak last Friday. The further downward movement depends on whether there has been a reversal in the underlying logic, and whether there will be a significant change in fund allocation strategy, which is lacking before the US economic data "returns". Certainly, the view of Minsheng Securities on the unusual combination in the recent market has been consistent, stating that the current simultaneous rise in "US stocks (especially tech stocks) + gold and silver + the US dollar" is not sustainable: Regarding future trends, Minsheng Securities are more inclined towards a "short-term rebound of the US dollar + adjustment of gold, silver / US stocks": In recent days, the precious metals with the largest gains are the most vulnerable. Looking at recent years, precious metals need to fall below the 20-day moving average at least to shift from rising to fluctuating, silver has done this, but gold has not; However, US stocks, because of the third-quarter reports and Trump's "verbal support", will show a certain resilience. Minsheng Securities tend to believe that in the absence of US economic data, the current adjustment of gold and silver is mainly to "deflate" and cool down, the narrative support behind is still there, but after the data "returns", there may be a second wave of adjustments. Risk warning: Significant changes in US trade policies; tariffs spread beyond expectations, leading to a greater-than-expected slowdown in the global economy, and an increase in market adjustment amplitude.