Fiery gold and silver were hit hard, and spot gold prices recorded their biggest one-day drop in seven years. As of the close on August 11, local time, COMEX gold futures reported $1921.8 per ounce, a sharp drop of 5.78%, the largest one-day decline since June 2013; COMEX silver futures reported $24.86 per ounce, a drop of 15.04%. 7-year high. As of 11:00 on August 12, Beijing time, the international spot gold price was hovering at $1,887 per ounce.

Why did precious metals suddenly “dive”? Gold and silver are suppressed by multiple factors.

First, the sharp rise in U.S. bond yields put pressure on precious metal prices. Wind data shows that the recent 10-year U.S. Treasury yield has continued to rise from 0.52% to 0.59%, and the rebound in U.S. Treasury yields has a greater suppressing effect on safe-haven gold. As of the close of the market on August 11, local time, US Treasury yields have risen sharply and the yield curve has steepened.

Second, the research and development of the new crown pneumonia vaccine is progressing rapidly, and risk aversion is suppressed. Russian President Putin announced on August 11 local time that the world’s first new crown vaccine has been registered. According to Zhang Qiang, CEO of Huiyan Huiyu Asset Management Company, with the rapid development of the new crown pneumonia vaccine, the market’s optimistic expectations for the prevention and control of overseas epidemics have risen, the risk aversion of gold and silver has been suppressed, and the price immediately “dump” .

Third, the divestment of gold ETFs is also one of the reasons for the decline in gold prices. During the shock of gold, the world’s largest gold ETF SPDR Gold Shares under State Street suffered a capital outflow of US$382 million on August 7, the largest divestment scale since March.

Fourth, some of the recent economic data released by Europe are eye-catching, which is also one of the factors that suppress gold prices. The latest economic situation forecast report released by the European Economic Research Center in Mannheim, Germany on August 11 shows that the economic confidence indexes of Germany and the Eurozone in August were better than market expectations.

In addition, the short-term short-term gold and silver gains have been too large before, and there is a demand for profit-taking in long positions. On August 5, the international spot gold price hit a record high of US$2031/oz, and the US$2,000/oz mark was officially broken. If starting from the low of $1451.1/ounce on March 16 this year, and breaking through $2031/ounce on August 5, the price of gold has risen by nearly $600/ounce in about 5 months. Spot gold has exceeded 30% this year, and this income far exceeds other major assets.

So, in the face of the recent sharp drop in gold and silver, what is the outlook for gold and silver? Can the suppressed gold and silver prices “recover blood”?

Industry insiders continue to be optimistic about the trend of gold and silver in the second half of this year. Goldman Sachs, an internationally renowned investment bank, is bullish on the prospects for gold’s rise, and recently raised its target price of gold to US$2,300 per ounce. The chief commodity strategist at Goldman Sachs believes that the depreciation of the U.S. dollar is a key factor, and the market’s confidence in the U.S. dollar as a global reserve currency is shaking. The Head of Commodity Strategy of Saxo Bank said that this round of gold price decline is an adjustment after the previous sharp rise. Taking into account the rising inflation in the United States, the negative real interest rate and the United States may implement yield curve control, still bullish gold.

Li Xunlei, chief economist of Zhongtai Securities, believes that “gold is still at the forefront of the volcanic eruption and has not yet erupted.” Wang Lixin, the managing director of the World Gold Council (WGC) China, is very optimistic about the prospects of the domestic gold jewellery market in the second half of the year. It is expected that wedding events postponed due to the epidemic will boost the demand for gold jewellery and further help the gold market recover.

Silver may also perform better in the second half of the year. Industry insiders said that in the financial market, silver has similar hedging properties to gold; at the industrial level, silver plays a very important role in industrial production, including the pick-up of industrial demand for electronics and photovoltaics, and large-scale commercial use of 5G for silver Demand is increasing; at the supply and demand level, the world’s major silver mines are located in Latin America, but the recent new crown pneumonia epidemic in these countries has not eased at all, and the severe epidemic has dragged down the production of silver. From this point of view, silver may also perform better in the second half of the year.

However, due to the obvious shocks in gold and silver recently, Zhang Qiang said that for ordinary investors, try to choose precious metals without leverage. Investors must have the awareness of asset portfolios and diversify investment risks.