It could be time to invest for gains in the beaten-up gold (GC=F) market. "This makes for, we think, a reasonable entry point," Barclays strategist Ajay Rajadhyaksha said in a note on Thursday. The buy-the-dip trade reflects a few factors that investors may be forgetting, Rajadhyaksha argued.

From Washington to London, more than a dozen central banks will hold policy meetings this week, with the economies they represent accounting for two-fifths of the global economy. Among them, in addition to the highly anticipated US Fed, another G10 central bank's policy meeting this week will also attract widespread attention: the Swiss National Bank (SNB), which has been continuously pushing global interest rates to new lows. According to industry surveys of economists, the SNB is likely to cut interest rates to zero this week and maintain them at this low level for some time. Nearly 80% of the surveyed economists expect that SNB policymakers will lower borrowing costs by 25 basis points to 0% this Thursday. This move will return the benchmark interest rate to a level not seen since September 2022, when the SNB just ended its seven-year negative interest rate policy. And this will also become the lowest interest rate among major economies globally at present. Among the 22 forecasting institutions surveyed, only three institutions—Pantheon Macroeconomics, Capital Economics, and Swiss Life Asset Managers—predict that the SNB will directly cut interest rates by 50 basis points to -0.25% this week. Another six institutions, including Goldman Sachs, Nomura, and Barclays, expect the SNB to enter "negative interest rate" territory in September, but most surveyed institutions believe the easing cycle will end in June. SNB officials can cite the country's extremely weak CPI growth as a reason for a sixth consecutive interest rate cut: Last month, Switzerland's inflation rate turned negative for the first time since early 2021. Meanwhile, economists surveyed by the industry predict that the average annual inflation rate will be only 0.3% this year and 0.6% in 2026. In addition, exchange rate fluctuations may also be one of the factors considered by the SNB this week. SNB policymakers are trying to take measures to curb capital inflows into the Swiss franc. Since US President Trump announced "Liberation Day" tariff measures in early April, the Swiss franc has appreciated more than 8% against the US dollar. Since then, the Swiss franc has also continued to appreciate against the euro, a currency pair of particular concern to the SNB. The strength of the Swiss franc has pushed down import costs and the consumer price index. It is worth mentioning that although SNB President Martin Schlegel stated in mid-May that officials had had productive discussions with Washington on central bank exchange rate intervention measures, the US Treasury still included Switzerland in its list of economies closely monitored for exchange rate policies in its semi-annual report on exchange rate policies last week.

A month ago, Caixin reported that as Trump's erratic tariff policies last month triggered a wave of selling of US assets, a new wave of "de-dollarization" was gaining momentum in Asia. Now, an increasing number of market participants are clearly unable to ignore the "rise" of this trend... On May 26, ASEAN committed in its newly released "Strategic Plan for the ASEAN Economic Community 2026-2030" to promoting the use of local currencies in trade and investment, and proposed measures such as expanding the use of local currencies for settlement and strengthening regional payment connectivity to mitigate the impact of exchange rate fluctuations. Lin Li, Head of Asia Global Markets Research at Mitsubishi UFJ Financial Group (MUFG), told the media that as Asian economies seek to reduce their reliance on the US dollar, particularly by using their own currencies as a medium of exchange to reduce foreign exchange risks, the trend of de-dollarization is strengthening. Although de-dollarization itself is not a new phenomenon, recent developments may have undergone a qualitative change. Investors and officials are beginning to recognize that, even if the US dollar has not been openly weaponized in trade negotiations, it can and has been used as a "bargaining chip." Mitul Kotecha, Head of Asia FX and Emerging Markets Macro Strategy at Barclays, said that this has prompted a reevaluation of investment portfolios that were previously heavily overweight in the US dollar. "Countries are focusing on the fact that the US dollar has been and can be used as a weapon in trade, direct sanctions, and other areas... I think this is the real change over the past few months," he said. Two Forces Accelerating the Evolution A recent report by Bank of America pointed out that the trend of ASEAN moving away from the US dollar is intensifying, driven by two main forces: ① Individuals and businesses are gradually starting to convert their US dollar savings back into local currencies; ② Large investors are beginning to hedge foreign investments more actively. Abhay Gupta, Asia Fixed Income and FX Strategist at Bank of America, said, "The de-dollarization process in ASEAN may accelerate, primarily through the conversion of foreign exchange deposits accumulated since 2022." In addition to ASEAN, BRICS countries, including India and China, are also actively developing and promoting their own payment systems to bypass traditional Western payment systems like SWIFT and reduce reliance on the US dollar. China has also been promoting the use of the yuan for bilateral trade settlement. Barclays' Kotecha pointed out that de-dollarization is a "continuous, slow process," but the gradual decline of the US dollar's status can be witnessed in both central bank reserve shares and trade settlement shares. He specifically mentioned the substantial overseas assets held by countries such as Singapore, South Korea, and China, which have significant potential for repatriating foreign exchange earnings. Andy Ji, Asia FX and Rates Analyst at ITC Markets, shares this sentiment. He points out that economies most reliant on trade will experience a more pronounced decline in demand for the US dollar. He specifically mentioned the economies within the 10+3 cooperation mechanism, which includes China, Japan, South Korea, and the 10 ASEAN member states. As of November last year, over 80% of trade in this region was still denominated in US dollars. Nomura Securities has observed a new trend: Asian investors are strengthening their hedging against US dollar exposure. Nomura notes that as Asian investors increasingly hedge against US dollar risks, a trend of de-dollarization is also emerging. Foreign exchange hedging refers to investors protecting themselves from significant currency value fluctuations by locking in exchange rates to avoid losses in the event of unexpected weakening or strengthening of the US dollar. Craig Chan, Global Head of FX Strategy at Nomura Securities, stated, "Some of the currencies that have recently performed strongly include the Japanese yen, South Korean won, and New Taiwan dollar." He observed that a considerable portion of foreign exchange hedging transactions come from institutional investors such as life insurance companies, pension funds, and hedge funds. According to Nomura Securities, the hedging ratio of Japanese life insurance companies was originally around 44%. In April and May, this figure rose to around 48%. Nomura Securities estimates that the hedging ratio of life insurance companies in Taiwan, China, is around 70%. When investors hedge against US dollar risks, they sell US dollars and buy local or other currencies, which increases demand for the US dollar and causes non-US currencies to appreciate against the US dollar. Is a structural shift underway? Clearly, the rise of this de-dollarization trend has once again raised a "perennial" question: Is this merely a phase of temporary reduction in US dollar holdings, or a more drastic structural shift? In fact, although similar shifts are more pronounced in Asia, the world is actually reducing its reliance on the US dollar—the share of the US dollar in global foreign exchange reserves has declined from over 70% in 2000 to 57.8% in 2024. Recently, due to uncertainties surrounding a series of decisions by the Trump administration, the US dollar has experienced a significant decline this year, particularly in April. Since the beginning of this year, the US dollar index has fallen by more than 8%, marking the worst performance in the first five months of the year in history, according to Dow Jones Market Data. However, some industry observers also state that despite many countries reducing their reliance on the US dollar, it remains challenging to replace the US dollar as the primary reserve currency. Cedric Chehab, chief economist at BMI, said that, for now, this may still be merely cyclical. He pointed out that it could only transform into a structural trend if the US implements sanctions more aggressively, prompting central banks to be wary of holding excessive US dollars, or if governments mandate pension funds to increase their holdings of domestic assets. Of course, the first threat mentioned by Chehab may have already occurred to some extent. What undoubtedly concerns many foreign entities the most is undoubtedly "Clause 899" in Trump's latest tax reform bill. If approved by Congress, this clause would allow the US to impose additional taxes on companies and investors from countries it deems to be implementing punitive tax policies. George Saravelos, global head of FX research at Deutsche Bank, said that this would mark the formal incorporation of the weaponization of US capital markets into law. Francesco Pesole, FX strategist at ING, pointed out that "Trump's erratic trade policy decisions and the significant depreciation of the US dollar may be encouraging a faster shift towards other currencies." Peter Kinsella, global head of FX strategy at Union Bancaire Privée, reminded people to distinguish between the weakening of the US dollar and de-dollarization. "The US dollar has gone through multiple cycles of depreciation, yet its hegemony as a reserve currency remains unchanged," he added. Even with reduced exposure, the US dollar's core position in trade invoicing remains solid—over half of global trade was still settled in US dollars in April this year. However, Kinsella also mentioned that, "the long-term declining trend in the US dollar's status as a reserve asset will continue, and I firmly believe that gold will be the biggest beneficiary." According to a report released by the European Central Bank on Wednesday, gold accounted for 20% of global official reserves in 2024, making it the second-largest reserve asset globally, second only to the US dollar at 46%.

Billionaire investor Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, warned in a new book that while the short-term risk of a debt crisis in the US is low, the long-term risk is high. In his book "How Countries Go Broke: The Big Cycle," published on Tuesday, he wrote that the US government's debt situation is "approaching a point of no return" and is heading toward a "death spiral" that could threaten the stability of the world's largest economy. He explained that higher deficits mean the Treasury may need to sell more bonds to finance its spending and interest payments. The debt "death spiral" refers to the situation where the government needs to issue more bonds to raise funds to repay existing debt, but demand is decreasing, forcing it to pay investors increasingly higher interest rates to attract them. "A spiraling rise in interest rates leads to a deterioration in credit risk, which leads to a decrease in demand for debt, which leads to higher interest rates—a classic debt 'death spiral'," Dalio wrote. In his book, he emphasized that the "imminent risk" of a US government debt crisis is "very low," but "the long-term risk is very high." Dalio added that the higher the interest rates investors charge the government for borrowing, the less money is available for governing the country, and interest rates for consumers and businesses will rise, typically leaving a country with fewer options for raising funds. "In my view, this suggests that US policymakers should be more conservative in managing government finances, as the worst thing is to have a weak government fiscal position during difficult times," he wrote. For years, some economists and investors have been warning about deficits. But this year, as President Trump's tariff and tax agenda has caused volatility in the bond market, which is typically a cornerstone of stability for the US and global economies, Wall Street has become cautious. Amid uncertainty about the economic outlook and the attractiveness of US assets, investors are increasingly concerned that Trump's "big and beautiful" budget bill could put even more pressure on the federal debt burden. Even Musk, once Trump's "closest ally," has warned that the bill is disgusting and will lead to a surge in the federal budget deficit. Jamie Dimon, CEO of JPMorgan Chase, also said last Friday that the bond market is "about to crack." Barclays analyst Ajay Rajadhyaksha said, "US long-term bond yields are already approaching their highest levels since the [2008 financial crisis]."As the market absorbs the details of the new tax bill and realizes that deficits are likely to continue rising in the foreseeable future, there is also a risk that long-term bond yields will continue to rise." Dario is the latest billionaire to sound the alarm on US debt and deficits, worrying that massive government debt will crowd out spending on essential services, leaving a hollowed-out economy that cannot serve its citizens, which has unsettled global investors. On May 22, before the publication of his new book, Dario also warned at an event in New York that the current US deficit is unsustainable and "beyond the market's capacity to bear." He said he expects the US to be in a "critical situation" in about three years. "I think we should be afraid of the bond market. I can tell you, the situation is very, very serious," he said. Dario also warned at the time that Democrats and Republicans had not shown that they could work together on this issue. "It's like being on a ship heading for the rocks. They agree that they should turn, but they can't agree on how to turn," he said.

More and more Wall Street investment banks have recently reiterated their forecasts that the US dollar will weaken further due to interest rate cuts, a slowdown in economic growth, and the trade and tax policies of US President Trump. Morgan Stanley has stated that the dollar will fall to its lowest level during the COVID-19 pandemic by the middle of next year; JPMorgan Chase is similarly bearish on the dollar; Goldman Sachs has indicated that if tariff measures are blocked, Washington's efforts to seek alternative sources of revenue could have an even more negative impact on the dollar. "We believe that a medium-term narrative around dollar depreciation is taking shape," said Aroop Chatterjee, a strategist at Wells Fargo in New York. On Monday, amid escalating global trade tensions, the dollar fell against all G10 currencies once again. Currently, the ICE US Dollar Index has accumulated an 8.9% decline year-to-date. According to Dow Jones Market Data, this represents the worst performance for the index in the first five months of the year on record. The Traditional Carry Trade Logic Has Been Upended It is worth noting that one of the most striking aspects of the dollar's continued weakness this year is the near disappearance of the traditional carry trade logic in the foreign exchange market. Due to President Trump's erratic policies, investor interest in US assets has cooled, and the traditional close relationship between US Treasury yields and the dollar has broken down. In the past, the movement of long-term US Treasury yields, which measure government borrowing costs, tended to move in tandem with the dollar exchange rate, with higher yields typically indicating a strong economy and attracting foreign capital inflows. However, since Trump announced his "Liberation Day" tariffs in early April this year, the 10-year US Treasury yield has risen from 4.16% to 4.42%, yet the dollar has declined by 4.7% against a basket of currencies. Last month, the correlation between the dollar exchange rate and US Treasury yields fell to its lowest level in nearly three years. Shahab Jalinoos, head of G10 FX strategy at UBS Group, said, "Under normal circumstances, a rise in US Treasury yields indicates a strong US economy. This is attractive for capital inflows into the US." However, he also noted that "if yields rise due to higher US debt risks, fiscal concerns, and policy uncertainty, then the dollar will weaken simultaneously. This pattern is actually quite common in emerging markets." And currently, the situation facing the dollar is undoubtedly the latter. Trump's aggressive push for the "Big Beautiful Bill" could exacerbate the US budget deficit, coupled with Moody's recent downgrade of the US sovereign credit rating, has made investors more concerned about the sustainability of the deficit and has placed severe pressure on US Treasury prices. Analysis by Torsten Sløk, chief economist at Apollo, shows that the credit default swap (CDS) spreads of the US government—a trading level reflecting the cost of hedging against loan default risks—are now similar to those of Greece and Italy. These two countries were once the "epicenters" of the European debt crisis. Trump's attacks on Fed Chairman Jerome Powell have also unsettled the market. He met with Powell last week and told the Fed Chairman that it was a mistake not to have implemented an interest rate cut so far this year. The US dollar has significant downside room. Michael de Pass, global head of interest rate trading at Citadel Securities, said, "In the past, the strength of the US dollar was partly derived from the integrity of its institutions: the rule of law, the independence of the central bank, and the predictability of policies. These factors made the US dollar a reserve currency." But he added, "In the past three months, these have all become issues. A major concern in the market currently is that the institutional credibility of the US dollar is being eroded." The divergence between US Treasury yields and the US dollar indicates that the market's traditional carry trade pattern has changed significantly in recent years—when expectations about the direction of monetary policy and economic growth were key drivers of government borrowing costs and exchange rate movements. Andreas Koenig, global head of foreign exchange at Allianz Global Investors, said that the new pattern may increase the risks faced by investors seeking safe-haven assets. He said, "This changes everything. In the past few years, holding long positions in the US dollar in a portfolio had been a very good stabilizing factor. When the US dollar was a stabilizing factor, you had a stable portfolio. But if the US dollar suddenly becomes correlated with other asset classes, that increases risk." Open interest data from the US Commodity Futures Trading Commission shows that market participants' bearish sentiment toward the US dollar is still far from extreme levels, underscoring that the US dollar may still face significant downward pressure in the future. JPMorgan strategists led by Meera Chandan strengthened their negative view on the US dollar last week, instead recommending bets on the Japanese yen, euro, and Australian dollar. Morgan Stanley also listed the euro, yen, and Swiss franc as the biggest winners from a US dollar decline. Skylar Montgomery Koning, currency strategist at Barclays, said that the US dollar's headwinds may come from further weakness in the bond market, an escalation of trade wars, and weak US data. Paresh Upadhyaya, head of foreign exchange strategy and portfolio manager at Amundi Pioneer Asset Management, expects that the Bloomberg Dollar Index will depreciate by another 10% over the next 12 months. "Capital Tax" Adds Insult to Injury For Goldman Sachs, another major risk that could further exacerbate the outlook for the US dollar is Trump's potential "next move" against foreign enterprises and investors—namely, the "Section 899" of the "Grand Beautiful Bill" mentioned by many market participants last week. As Caixin reported last week, this section would allow the US to impose additional taxes on enterprises and investors from countries deemed to have punitive tax policies. In other words, if a country is identified by the US Treasury Department as engaging in "unfair taxation," entities from that country—including enterprises, residents, and even overseas controlled companies held by these individuals or enterprises—may face higher tax rates on their investments and business activities within the US. Goldman Sachs strategists, including Kamakshya Trivedi and Michael Cahill, wrote in a report that even though the scope of application of this tool is relatively narrow, at a time when investors are already viewing the shift in cross-asset correlations as a reason to avoid US assets and seek greater diversification, such tools will still exacerbate investors' concerns about US investment risks. In another report, Goldman Sachs strategists stated that their models indicate the US dollar is overvalued by about 15%, suggesting there is further downside room. They added that this decline could be driven by the reallocation and repricing of global assets. Goldman Sachs strategists believe that investors should prepare for a weaker US dollar—especially depreciation against the euro, yen, and Swiss franc, which have all appreciated in recent months. They also pointed out that these new risks provide a strong rationale for allocating some funds to gold. Matthew Hornbach, global head of macro strategy at Morgan Stanley, also said in a media interview on Monday, " Investors outside the US are reevaluating their exposure to the US —both in terms of asset holdings and the currency risk exposure associated with these asset holdings. They have increased their hedging ratios, which is one of the factors contributing to downward pressure on the US dollar over the next 12 months." The bank forecasts that the US dollar index will fall by about 9%, reaching 91 by this time next year. Shahab Jalinoos, a strategist at UBS, pointed out, "The greater the policy uncertainty, the more likely investors are to increase their hedging ratios. If hedging ratios increase based on the existing stock of US dollar assets, this could lead to billions of dollars in selling." "

SMM News on May 15: Metal Market: Overnight, base metals on both domestic and overseas markets generally rose. LME zinc led the gains with a 2.09% increase, while LME aluminum and SHFE zinc both rose by over 1%, with LME aluminum up 1.31% and SHFE zinc up 1.24%. LME copper was the only metal to decline, with a drop of 0.08%, while the gains of other metals were all within 1%. The main alumina futures contract rose by 3.51%, recording seven consecutive days of gains. The ferrous metals series also collectively rose, with iron ore leading the gains with a 1.3% increase. The gains of other metals fluctuated slightly. In the coking coal and coke sector, coking coal rose by 0.97% and coke rose by 0.85%. In precious metals, COMEX gold fell by 2.07% overnight, hitting a new low since April 10. COMEX silver fell by 2.15%. Domestically, SHFE gold fell by 2.04% and SHFE silver fell by 1.4%. Overnight closing prices as of 6:44 a.m. on May 15 》Click to view SMM Futures Data Dashboard Macro Front Domestic: [PBOC: Total Social Financing Increased by 16.34 Trillion Yuan from January to April, New Loans Increased by 10.06 Trillion Yuan, M2 Grew 8% YoY in April] PBOC data showed that China's total social financing increased by 16.34 trillion yuan from January to April, 3.61 trillion yuan more than the same period last year. At the end of April, the balance of broad money (M2) was 325.17 trillion yuan, up 8% YoY. The balance of narrow money (M1) was 109.14 trillion yuan, up 1.5% YoY. The balance of currency in circulation (M0) was 13.14 trillion yuan, up 12% YoY. Net cash injection in the first four months was 319.3 billion yuan. New RMB loans increased by 10.06 trillion yuan from January to April. At the end of April, the balance of domestic and foreign currency loans was 269.54 trillion yuan, up 6.8% YoY. The balance of RMB loans was 265.7 trillion yuan, up 7.2% YoY. 》Click to view details On May 14, Zheng Shanjie, Director of the National Development and Reform Commission (NDRC), chaired a symposium with private enterprises, focusing on listening to opinions and suggestions regarding the current economic situation and the implementation of policies to stabilize employment and the economy. At the meeting, the heads of participating enterprises introduced the development of their companies and industries, and also put forward suggestions for promoting the high-quality development of private enterprises under the new situation. US Dollar: The US dollar index rose by 0.08% overnight, rebounding from earlier declines as investors awaited new signals that the global trade war would continue to ease. At the beginning of the week, the US dollar index jumped over 1% on Monday and hit a new high in a month. However, as the decline in food costs partially offset the increase in rent, a measure of consumer prices fell short of economists' expectations, and the US dollar exchange rate fell on Tuesday. Given the easing of trade tensions, market expectations for a US Fed interest rate cut this year have been revised downward. According to data, the probability of the first rate cut of at least 25 basis points occurring at the September meeting is 74%, whereas previous views suggested a rate cut in July. Several major brokerages, including Goldman Sachs, JPMorgan Chase, and Barclays, have recently scaled back their forecasts for a US recession and their views on the US Fed's easing policies. Chicago Fed President Goolsbee stated that the data showing mild consumer inflation in April does not necessarily reflect the impact of rising US import tariffs, and the US Fed still needs more data to determine the direction of prices and the economy. US Fed Vice Chair Jefferson echoed similar views, stating that recent inflation data indicate good progress towards achieving the US Fed's 2% target, but the current outlook is uncertain due to the potential for new import taxes to drive up prices. (Wenhua Comprehensive) In other currency news: The South Korean won rose 0.84% against the US dollar, after previously gaining 2.1%. The US dollar fell to its lowest level against the won in a week, but the movement of Asian currencies has eased. The US dollar fell 0.52% against the Japanese yen to 146.71, with intraday losses reaching as high as 1.2%. The British pound fell 0.32% to $1.3261. Catherine Mann, a member of the Bank of England's Monetary Policy Committee (MPC), stated that she voted to keep borrowing costs unchanged last week because the resilience of the UK labour market exceeded her expectations. She had sought a significant 50 basis point cut in borrowing costs in February. On the macro front: Today, the following data will be released: the operation scale of China's Medium-term Lending Facility (MLF) on May 15, the winning bid interest rate of China's Medium-term Lending Facility (MLF) on May 15, the number of initial jobless claims in the US for the week ending May 10, the US May New York Fed Manufacturing Index, the US May New York Fed Manufacturing Index for the next 6 months, the US May Philadelphia Fed Manufacturing Index, the US April PPI year-on-year rate, the US April core PPI year-on-year rate, the US April core retail sales month-on-month rate, the US April retail sales year-on-year rate, the US April retail sales control group month-on-month rate linked to GDP - seasonally adjusted, the US April industrial production month-on-month rate, the US April capacity utilisation rate, the US April manufacturing production month-on-month rate, the US April industrial production year-on-year rate - seasonally adjusted, Australia's April RBA foreign exchange transactions - market channel, Australia's April seasonally adjusted unemployment rate, Australia's April change in employed population, the UK's March GDP month-on-month rate, the UK's March industrial production month-on-month rate, the UK's March industrial production year-on-year rate, the UK's March merchandise trade balance - seasonally adjusted, the UK's March seasonally adjusted trade balance, the UK's preliminary Q1 production-based GDP year-on-year rate, Canada's March manufacturing sales month-on-month rate, Canada's March manufacturing new orders month-on-month rate, the Eurozone's Q1 seasonally adjusted GDP quarter-on-quarter rate revised value, the Eurozone's Q1 seasonally adjusted GDP year-on-year rate revised value, and other data. Additionally, Fed Chairman Powell delivered opening remarks at an event, and the US Fed held the second Thomas Laubach Research Conference, which will focus on research in monetary policy and economics. It is expected to provide an academic perspective for the Fed's commitment to conducting a review of its monetary policy framework every five years, running until the 16th. Mary Daly, the 2027 FOMC voter and President of the Federal Reserve Bank of San Francisco, participated in a fireside chat. Crude Oil: Oil prices in both markets fell overnight, with US crude dropping 1.23% and Brent crude declining 1.17%. This followed earlier data showing an unexpected increase in US crude oil inventories last week, sparking investor concerns about a supply surplus. A stronger US dollar made dollar-denominated oil more expensive for investors holding other currencies, thereby hurting demand. The US Energy Information Administration (EIA) stated that US crude oil inventories rose last week as the country imported more oil, while gasoline and distillate inventories declined ahead of the summer driving season. The EIA reported that US crude oil inventories increased by 3.5 million barrels to 441.8 million barrels in the week ending May 9, against market expectations of a 1.1 million barrel decline. Data released by the API on Tuesday also showed a significant increase of 4.3 million barrels in crude oil inventories last week. The Organization of the Petroleum Exporting Countries (OPEC) stated in its monthly report that crude oil production by all OPEC+ member countries fell by 106,000 barrels per day in April compared to March, despite eight OPEC+ oil-producing countries vowing to begin easing production cuts. However, OPEC+ lowered its forecast for oil supply growth this year from the US and other non-OPEC+ oil-producing countries in the report. (Wenhua Comprehensive)