China Securities Co.,Ltd.: How should we understand the recent abnormal performance of the precious metals market?

China Securities Co., Ltd. Futures released a research report stating that in the short term, the substitution effect across assets is more of a one-off shock. However, monetary conditions remain tight, oil prices are generally elevated, overseas equity markets have not yet stabilized, and the short-term support for the commodity attributes of silver, platinum, and palladium is not strong. These bearish factors for precious metals are difficult to fully dispel, and the rebound momentum is expected to be limited in the short term. But from a long-term perspective, gold, as the anchor of the precious metals sector, has not seen its long-term bullish logic shaken. There may be turbulence in the medium to short term, but it still has the ability to lead the precious metals sector as a whole higher. Recently, precious metals have generally shown weakness, with gold, silver, platinum, and palladium all falling below their lows for the year. Sentiment was once pessimistic, and more "opposing views" on the "long-term bull market" logic for precious metals have appeared in the market. At the same time as precious metals weakened, their market performance also deviated from the traditional explanatory framework: the U.S. dollar and U.S. Treasury yields, which are important influencing factors for precious metals, moved in the same direction as precious metals; the precious metals sector, originally known for its safe-haven attributes, recently rose and fell together with the global technology sector, with "risk-asset" characteristics becoming increasingly prominent; and the traditional chain of "rising oil prices - inflation concerns - suppressing precious metals" has also loosened somewhat. Regarding the new logic of the "gold-U.S. Treasuries" substitution effect, under the traditional analytical framework, U.S. Treasuries and the U.S. dollar, as representatives of the credit currency system, have a significant substitution effect with precious metals. The recent same-direction movement of precious metals with the U.S. dollar/U.S. Treasury yields is more due to capital behavior, with the cross-asset substitution effect being expressed in a new form. Regarding the "risk-assetization" of precious metals, gold's safe-haven attribute has been temporarily weakened more due to capital-side factors, but for silver it is more due to marginal changes in driving narratives and capital structure, rather than entirely due to portfolio balancing and liquidity replenishment motives. Regarding the temporary failure of the "crude oil-inflation-precious metals" linkage, this is more due to the neutral remarks of Warsh and Federal Reserve officials causing the Fed rate hike expectations to move out of an overshoot state, so that the rise in crude oil prices did not immediately transmit to the rate hike expectation level. However, in the medium term, the transmission of oil prices to inflation remains an important variable affecting precious metals.