The Fed's Hawkish Stance Pressures the Market, Gold and Copper Prices Weaken Across the Board
Last week, the US Federal Reserve announced a 25 basis point rate cut as expected. However, Chairman Powell's hawkish remarks significantly raised the market's expectations for further rate cuts, putting pressure on risk assets. Consequently, gold, silver, and copper prices experienced declines to varying degrees.
Underwhelming Performance of Precious Metals and Copper Prices
In the precious metals market, COMEX gold fell by 0.95% and silver by 2.98% last week. Domestically, the SHFE Gold 2502 contract and the SHFE Silver 2502 contract fell by 1.86% and 4.5% respectively. In the industrial metals sector, COMEX copper prices fell by 2.31%, while SHFE copper decreased by 1.3%.
The hawkish stance from the Fed meeting was the main source of pressure. Despite the market previously anticipating a hawkish message alongside the rate cut, the actual wording was stronger than expected, with some committee members opposing the rate cut and a downward revision in the expected number of rate cuts in 2025 to just two. This caused significant increases in the dollar and forward interest rates, suppressing risk assets including precious metals and copper.
Impact of the Fed's Hawkish Signals on the Market
Following the Fed's monetary policy meeting, expectations for next year's rate cut were sharply reduced from 75 basis points to 50 basis points, and long-term US Treasury yields rose rapidly. This trend placed pressure on precious metal prices, especially gold and silver.
In the short term, gold remains within a wide fluctuation range, and geopolitical crises may provide some safe-haven support. However, in the medium term, potential re-inflation risks in the US economy could provide further upward momentum for gold prices. Analysts point out that although the Fed's hawkish attitude is clear, there is still uncertainty in its monetary policy path, and the market's future trends need to pay attention to actual economic data and Fed policy adjustments.
Pressure on Copper Prices and Market Outlook
Copper prices are also suppressed by hawkish policies. Concerns about a high interest rate environment have pressured the demand outlook for industrial metals. Analysts believe that despite the Fed's strong statements, there may still be adjustments in policy implementation due to changes in economic data, suggesting potential rebound space in future copper price movements.
Key Factors for Future Outlook
The short-term pressure on precious metals and copper prices may not dissipate quickly. However, in the medium term, geopolitical risks and US inflation dynamics could become the main factors driving a rebound in gold prices. Meanwhile, the industrial metal market will need to continuously monitor the global economic recovery pace and the impact of monetary policy changes on demand. In the coming months, the Fed's policy direction and actual economic performance will be the core drivers of market trends.
