Feb 6 (Reuters) - Gold premiums in India more than halved from decadal highs this week as price volatility deterred buyers, while a pullback from record prices lifted demand in China ahead of the Lunar New Year.

Affected by the sharp escalation of geopolitical tensions in the Middle East, US and Brent crude oil prices surged rapidly, with gains quickly expanding to 4%. Spot gold prices broke through $3,410 per ounce, hitting a new high since May 8. Israel has closed its airspace until further notice. Iran's state television reported that the country's air defense system is on full alert. According to CNN, Trump convened a cabinet-level meeting. The US and Iran are scheduled to hold the sixth round of nuclear talks in Oman on Sunday.

"Cut interest rates by 100 basis points!" Trump speaks out again On the evening of June 11, US President Trump posted on his social media platform "Truth Social" that the latest US CPI data showed positive results, and he called on the US Fed to cut interest rates by 1 percentage point (100 basis points). US Vice President Vance stated that the US Fed's refusal to cut interest rates was a dereliction of duty in monetary policy. Data released by the US Department of Labor showed that the full impact of Trump's across-the-board tariff hikes had not yet fully materialized, with US CPI inflation in May falling short of expectations across the board. The data indicated that the US unadjusted CPI year-on-year rate for May was 2.4%, lower than the market expectation of 2.5%; the seasonally adjusted CPI month-on-month rate for May was 0.1%, lower than the expected 0.2% and the previous value of 0.2%. Excluding food and energy costs, the core CPI rose 2.8% YoY, remaining at the lowest level since March 2021, with an expected value of 2.9% and a previous value of 2.8%; the seasonally adjusted core CPI month-on-month rate for the US in May was 0.1%, with an expected value of 0.3% and a previous value of 0.2%. The US Bureau of Labor Statistics stated that the continued weakness in energy and service prices offset the impact of price increases in other goods, while some key items originally expected to rise due to tariffs, particularly car and clothing prices, actually saw price decreases. The data showed that energy prices fell by 1% in the month, with gasoline prices dropping by 2.6%, and prices for new and used cars falling by 0.3% and 0.5%, respectively. Food prices rose by 0.3%, and housing prices also increased by 0.3%, while clothing prices unexpectedly fell by 0.4%, indicating that the cost increases brought about by tariffs had not yet been passed on to consumers. Nick Timiraos, known as the "Fed Whisperer," commented that the decline in car and clothing prices led to a lower-than-expected reading for the core CPI in May. Some forecasters had believed that these two items would show the early impact of tariffs in May. After the data release, spot gold prices continued to rise, breaking through $3,360 per ounce. The three major US stock index futures surged briefly but then fell. By the close, the S&P 500 index closed down 16.57 points, or 0.27%, at 6,022.24 points. The Dow Jones Industrial Average closed down 1.10 points, or 0.00%, at 42,865.77 points. The Nasdaq closed down 99.11 points, or 0.50%, at 19,615.88 points. The Nasdaq 100 index closed down 81.12 points, or 0.37%, at 21,860.80 points. Trump says "confidence is waning" in reaching a nuclear deal; international oil prices surge According to AFP, both the US and Iran made their latest statements on the US-Iran nuclear negotiations on June 11. US President Trump stated in an interview aired on the same day that his "confidence has waned" in reaching a nuclear deal with Iran. Meanwhile, Iran said on June 11 that if negotiations fail and a conflict breaks out between the US and Iran, it will target US military bases in the Middle East. Upon the news, the crude oil market reacted swiftly. WTI crude oil futures for July delivery closed up $3.17/bbl, a 4.88% increase, at $68.15/bbl. Brent crude oil futures for August delivery closed up $2.90/bbl, a 4.33% increase, at $69.77/bbl. What is the outlook for the cast aluminum alloy futures market? Yesterday, the most-traded AD2511 cast aluminum alloy futures contract closed at 19,400 yuan/mt, up 0.91%. Regarding the current operational logic of the cast aluminum alloy market, Xiao Yufei, head of the Nonferrous Metals Research Team at Nanhua Futures, believes that the supply surplus in the cast aluminum alloy industry will persist. The planned new capacity for domestic aluminum alloy ingots in 2024-2025 is 1.145 million mt/year. However, due to various constraints, the actual capacity that has come online is only 260,000 mt/year. It is expected that in 2025, the cast aluminum alloy industry will continue to see capacity growth but with slower commissioning. According to Xiao Yufei, the downstream consumption of cast aluminum alloy mainly flows into sectors such as transportation, machinery manufacturing, home appliances, and hardware. Among them, transportation vehicles, including cars, motorcycles, and EVs, account for over 70% of downstream demand. Therefore, the demand for cast aluminum alloy primarily depends on the performance of the automotive market. The automotive industry has generally performed well this year, with production and sales showing steady growth compared to the same period last year. However, considering that the H2 is approaching the off-season, the growth rate of cast aluminum alloy demand may slow down. In addition, aluminum scrap inventory is tight, and raw material procurement is difficult. The inability to restock in a timely manner has led to a continuous decline in the raw material inventory of secondary aluminum alloy enterprises. "Finished product inventories are at a relatively high level. Given the current loose supply situation, we believe that the inventory buildup trend of secondary aluminum alloy will persist for some time. Considering the high correlation between aluminum alloy prices and SHFE aluminum prices, spot and futures prices are more inclined towards a backwardation structure," Xiao Yufei said. Fu Ying, a nonferrous metals analyst at the Zheshang Futures Research Center, believes that the current cast aluminum alloy market is in a phase of weak supply and demand. The automotive market, a major end-use application for cast aluminum alloy, is currently in an off-season for production. Under the "produce based on sales" model of alloy enterprises, their operating rates will also decline accordingly. Meanwhile, the trend of weakening demand will become more pronounced, with both social inventory and raw material inventory showing continuous accumulation. Therefore, the spot price of cast aluminum alloy is expected to fluctuate around production costs. The first listed futures contract for cast aluminum alloy was AD2511, with a delivery month of November. According to Chen Xinyi, the head of the Non-Ferrous Metals and New Energy Team at Wuchan Zhongda Futures, the aluminum scrap recycling system is relatively "informal," which leads to a decrease in aluminum scrap recycling volume during holidays. Typically, aluminum scrap supply is relatively tight in Q4, and its prices hold up well compared to primary aluminum. From a demand perspective, ADC12 demand exhibits significant seasonal characteristics, with peak seasons generally occurring from September to January of the following year, and November being a peak consumption month. Therefore, the inter-month price spreads for the AD2511, AD2512, and AD2601 contracts are currently in a contango state. "Before the listing of cast aluminum alloy futures, spot market reference prices were mostly anchored to the Baotai price," Chen Xinyi said. Currently, the Baotai quote for ADC12 is 19,400 yuan/mt. Considering that some registered brands are priced at a discount to the Baotai price and the slim profit margins of alloy enterprises, companies have little incentive to price and sell futures contracts in advance. Currently, the downside room for aluminum scrap prices, which are closely linked to aluminum prices, is limited. This keeps ADC12 prices relatively strong in the short term, with the main operating range being 19,000-19,600 yuan/mt. In practice, according to Chen Xinyi, the ADC12-A00 price spread exhibits significant seasonal characteristics, weakening in Q2 and strengthening in Q3. Affected by policies, despite a capacity utilisation rate as high as 97%, electrolytic aluminum continues to destock, while the supply and demand of secondary aluminum show a surplus, with the current capacity utilisation rate being less than 50%. When the ADC12-A00 price spread is at historically high levels, the substitution effect of primary aluminum for aluminum scrap gradually becomes apparent. Some companies may consider adjusting their raw material ratios, and increased demand for electrolytic aluminum supports price increases, thereby driving the ADC12-A00 price spread to revert. In the short term, Fu Ying stated that cast aluminum alloy futures prices are expected to mainly follow aluminum price fluctuations, with cost support existing below. On the one hand, the most-traded cast aluminum alloy futures contract, AD2511, is still far from its delivery date, and the price trend of cast aluminum alloy is consistent with that of aluminum. The current low inventory and continuous destocking of electrolytic aluminum provide support for aluminum prices. On the other hand, the supply and demand of aluminum scrap are relatively tight, with aluminum scrap costs accounting for nearly 90% of the cost of cast aluminum alloy. The firmness of aluminum scrap prices supports ADC12 prices. However, affected by the traditional off-season, the upside room for cast aluminum alloy prices is also limited. Additionally, under the off-season consumption, the demand for selling hedging by cast aluminum alloy producers is high, which will suppress futures prices. Regarding the key points to be monitored subsequently, Fu Ying believes they mainly include changes in aluminum scrap supply, downstream demand, and the changes and impacts of spot pricing models after the listing of futures. Aluminum scrap supply determines the cost trend of cast aluminum alloy, while downstream demand affects the price spread fluctuations between cast aluminum alloy and primary aluminum. Stronger demand will drive the price spread between the two to revert. Currently, the spot price of cast aluminum alloy mainly refers to the quotes on information websites and the "enterprise quotes + premiums and discounts" model, lacking a relatively open and transparent market mechanism. After the listing of cast aluminum alloy futures, the number of market participants will gradually increase, which will help optimize the spot pricing model.

After a clear upward breakout in technical patterns, the precious metals market witnessed a spectacular scene of "silver and platinum soaring together" on Thursday... On one hand, spot silver prices surged by 4.5% during Thursday's trading session, reaching a high of $36.06 per ounce, the highest level since February 2012. On the other hand, spot platinum prices soared by 4.8% overnight and further refreshed their highest level since March 2022 at $1,152 per ounce during the Asian session on Friday. It can be said that these two precious metal commodities, which were unremarkable during the gold rally earlier this year, now seem to be simultaneously embarking on a catch-up rally... In response, industry insiders stated that the simultaneous surge in silver and platinum appears to reflect investors' growing demand for precious metals used in industrial applications. Meanwhile, with gold prices already hovering near a high of $3,400, other precious metal varieties that had lagged behind in gains are now coming more into the sight of physical buyers and investors. Nicky Shiels, Head of Metal Strategy at MKS PAMP SA, pointed out in Thursday's report that the enhanced technical momentum and improved fundamentals across the precious metals sector have provided a boost to these metals. Strong physical silver demand from India and the recovery of platinum demand in China have further strengthened the upward trend. Silver—and sometimes platinum as well—often moves in tandem with gold, which has long been regarded as a timeless safe haven during periods of geopolitical turmoil. Over the past 12 months, spot gold prices have surged by more than 40%, as the escalation of tariff wars initiated by the US has enhanced its safe-haven appeal, and central banks around the world have continued to make substantial purchases. The gains in silver and platinum over the past year have actually fallen far short of those in gold—up 19% and 13% respectively as of Thursday. This scenario is naturally related to their far weaker safe-haven attributes compared to gold. However, in the industrial sector, they are not without value to explore. Silver is a key material for solar panels, while platinum is used in automotive catalytic converters and laboratory equipment. After years of undersupply, both metals markets will still face a supply deficit this year. Catch-up rally begins MKS PAMP's Shiels stated that maintaining silver prices above $35 would be a "critical turning point," and if sustained, it should reignite the interest of retail investors who have been on the sidelines. She further added that given the high leasing rates indicating a tightening market, a potential recovery in demand for platinum ETFs could trigger a speculative rally. According to industry-compiled data, the open interest in platinum ETFs is currently showing signs of a rebound, having increased by more than 3% since mid-May. Meanwhile, inflows into silver ETFs have also been growing continuously since February, with cumulative open interest climbing by nearly 8%. Alexander Zumpfe, a senior trader at Germany's gold refiner Heraeus Group, stated that the recent rally in silver may be driven by a combination of technical momentum, improved fundamentals, and rising investor interest. He pointed out, "After lagging behind gold for several weeks, silver is now catching up, indicating that momentum-driven investors have reignited their interest in silver." Maria Smirnova, senior portfolio manager and chief investment officer at Sprott Asset Management, also noted, "This breakout in silver has been brewing for some time. Silver has made multiple attempts to breach the $35 mark in recent months, making this breakout significant. If changes in technical factors further drive physical investors to buy in the coming days, silver prices could rise rapidly and substantially." Investors are also currently focusing on the US May non-farm payrolls report, which will be released on Friday evening. The poor performance of the US ADP employment data and initial jobless claims on Wednesday and Thursday has strengthened market expectations that the US Fed will cut interest rates at least twice this year. A decline in borrowing costs typically benefits the performance of these precious metals.

In this historic bull market for gold, the "gold-buying spree" by central banks worldwide is undoubtedly a key driving force behind the rise in gold prices. Although the true scale of gold purchases by these "central bank moms" remains a mystery, few industry insiders believe they will stop in the future... According to estimates by Goldman Sachs analysts, central banks globally are currently adding roughly 80 mt of gold each month—valued at approximately $8.5 billion at current prices. Most of these purchases are conducted privately and secretly. Data from the World Gold Council also leads to a similar conclusion: Central banks and sovereign wealth funds are currently "sweeping up" approximately 1,000 mt of gold annually, equivalent to at least a quarter of the world's annual gold mine production. A survey conducted by HSBC in January this year among 72 central banks revealed that more than one-third of the respondents plan to buy more gold in 2025, with none intending to sell. During periods of geopolitical tension, gold often serves as a safe haven. Although this buying spree began before US President Trump launched a global trade war, it still underscores the growing concerns of some countries about over-reliance on the US dollar, the world's dominant reserve currency. The scorching rally in gold prices over the past few years has only further increased the allure of the precious metal. A prime example is that, the National Bank of Kazakhstan was among the largest gold sellers among global central banks last year. However, according to Governor Daniyar Akishev of the National Bank of Kazakhstan, the bank has reverted to being a net buyer this year and plans to continue increasing its reserves. Akishev stated, "Gold is often seen as a safe-haven asset, but in the current circumstances, considering all the panic, tariffs, and reshaping of global trade, it has also become an investment asset." Is there a "shortcut" to $6,000? For Goldman Sachs, the belief that the gold-buying spree by central banks will continue is the main reason for the bank's persistence in its forecast of $3,700 per ounce by the end of the year. As of Wednesday's Asian session, spot gold prices were recently trading near $3,365, not particularly far from the historical peak of $3,500 set in April. From the perspective of global central bank activities, after the Russia-Ukraine conflict in 2022 led the US and its Western allies to freeze Russia's foreign exchange reserves, the pace of gold purchases by "central bank moms" worldwide nearly doubled. This move to "weaponize finance" has prompted many central banks to consider diversifying their reserves, while the renewed threat of inflation and speculation that the US government may not be as accommodating to foreign creditors have further highlighted gold's appeal to policymakers. Adam Glapiński, governor of the National Bank of Poland, one of the largest gold buyers in recent years, said, "Gold is the safest reserve asset. It has no direct link to the economic policies of any country, can withstand crises, and can maintain its real value over the long term." Massimiliano Castelli, managing director at UBS Asset Management, which provides strategic advice to many central banks, said, "In addition to the risk of sanctions, earlier this year, speculation that the Trump administration would deliberately pursue a policy of devaluing the US dollar, as well as threats to the independence of the US Fed, have made some institutions uneasy." Castelli said, "Given the threats to the US dollar, its share in international reserves may face a sustained decline—perhaps slightly faster than the pace we have seen in the past few years, as central banks are diversifying into other currencies and gold." That said, with limited issuance of bonds denominated in other currencies, central banks have limited options when seeking diversification. However, the growing inflow of funds into gold has become an inevitable trend and may further support the rally that began in late 2022, when gold prices doubled. According to JPMorgan Chase, even if only 0.5% of foreign-held US assets are shifted into gold in the coming years, it would be enough to drive gold to $6,000 per ounce by 2029. Evy Hambro, head of thematic and sector investing at BlackRock, said, "The gold market is large, but the US dollar market is even larger. Even a small amount of funds flowing from the US dollar market into gold would have a significant impact."

This week, Hong Kong stocks generally maintained their strong momentum, with the weekly performances of the three major indices varying. By the close of trading, the Hang Seng Index (HSI) had risen by 1.10% week-on-week to close at 23,601.26 points; the Hang Seng Tech Index had fallen by 0.65% week-on-week to close at 5,246.87 points; and the Hang Seng China Enterprises Index (HSCEI) had risen by 1.36% week-on-week to close at 8,583.86 points. Note: Weekly performance of the HSI since the beginning of the year Notably, the HSI has achieved seven consecutive weeks of gains. Medium and long-term optimism becomes consensus among institutions Huatai Securities pointed out that despite uncertainties surrounding tariff issues and potential short-term disruptions due to high US Treasury yields, the risk premium of Hong Kong stocks has significantly pulled back, and the easing of tail risks in the economy will drive up the market's center of gravity. Morgan Stanley recently raised its target for the HSI to 24,500 points by 2026, emphasizing the valuation reshaping opportunities brought about by structural improvements in the Chinese stock market. However, CICC cautioned about short-term risks, believing that current market sentiment has recovered to a cyclical high, and the marginal effect of policy efforts may weaken. 3SBIO leads the market gains this week In the list of weekly gainers, 3SBIO (01530.HK) led the market with a weekly gain of 57.38%. The pharmaceutical company's collaboration agreement with Pfizer on a PD-1/VEGF bispecific antibody drug set a new industry record, with an upfront payment plus milestone payments totaling up to $6 billion, creating a new benchmark for out-licensing of domestically developed innovative drugs. Another pharmaceutical stock that performed well was ImmuneOnco Biopharmaceuticals (01541.HK), which rose by over 36% week-on-week. The company recently announced clinical progress, including the successful enrollment of three patients in the Phase Ib clinical trial of its first dual-target large molecule drug for autoimmune diseases, Amurevup alpha (CD47xCD20, IMM0306), targeting neuromyelitis optica spectrum disorder (NMOSD), with all patients receiving the drug smoothly. In addition, Alibaba Pictures surged by over 50% this week. The company recently announced its renaming to "Damai Entertainment Holdings Limited," focusing on the layout of the offline entertainment ecosystem and enhancing its brand recognition in the overall entertainment market. Subsequently, Huatai Securities and Citi raised their target prices to HK$0.75 and HK$0.92, respectively. Both Datang Gold and Lingbao Gold benefited from the trend of international gold prices, rising by 28.13% and 27.44%, respectively. In terms of news, COMEX gold continued to strengthen after breaking through $3,300 this week and is currently trading near $3,353. Technical pullback and signs of capital rotation emerge in the market on Friday Despite maintaining the recent upward trend overall this week, today's performance was not ideal. By the close of trading on Friday, the HSI had risen by 0.24%, the Hang Seng Tech Index had fallen by 0.09%, and the HSCEI had risen by 0.31%. The futures market showed significant divergence, with the pharmaceutical and gold sectors bucking the trend to strengthen, while the real estate sector was weighed down by development and investment data, and tea beverage stocks saw a correction as investors took profits. Pharmaceutical stocks were boosted by multiple positive factors. By the close of trading, Hengrui Medicine (01276.HK), Luye Pharma (02186.HK), and Innovent Biologics (01801.HK) had risen by 25.20%, 5.74%, and 4.18%, respectively. Note: Performance of pharmaceutical stocks In terms of news, pharmaceutical stocks have recently been receiving a series of positive developments, including the aforementioned agreement between Pfizer and 3SBio, as well as the strong debut performance of Hengrui Medicine on its first day of trading in Hong Kong. Zhongtai Securities stated that since 2024, despite monthly fluctuations in overseas CPI data, there is an expectation of a gradual shift towards interest rate cuts, with an anticipated improvement in investment and financing conditions. It is expected that integrated CRO/CDMO companies primarily reliant on overseas revenue, as well as domestic preclinical CRO companies, will see opportunities for valuation recovery. The first-day performance of Hengrui Medicine's H shares attracted significant market attention, with the stock surging over 30% during intraday trading. The company received over 450 times oversubscription during its IPO phase, highlighting the global competitiveness of Chinese innovative pharmaceutical companies as international institutions scrambled to acquire shares. The safe-haven attribute of the gold sector became prominent. By the close of trading, Lingbao Gold (03330.HK), Chifeng Jilong Gold Mining (06693.HK), and Zijin Mining (01815.HK) had risen by 9.16%, 3.28%, and 2.63%, respectively. Note: Performance of gold stocks On the news front, spot gold prices continued to rise, currently standing above $3,350 per ounce. CITIC Futures pointed out that the passage of Trump's "Tax Cuts and Jobs Act" through the House of Representatives has increased the likelihood of large-scale tax cuts being implemented, with expectations rising for a continued climb in the US deficit rate. This aligns with Moody's downgrade of the US credit rating, as the disorderly expansion of debt leads to a gradual contraction in the US dollar's creditworthiness, providing solid support for the medium and long-term bullish outlook on gold. Louise Street, Senior Market Analyst at the World Gold Council, stated that the macroeconomic situation remains difficult to predict, and this uncertainty may bring further upside potential to gold prices. As the turbulent situation persists, the demand for gold as a safe-haven asset from institutional, individual, and official sectors may further increase in the coming months. Real estate stocks were weighed down by development and investment data. By the close of trading, Yuexiu Property (00123.HK), Ronshine China (03301.HK), and China Vanke (02202.HK) had fallen by 2.68%, 1.44%, and 0.79%, respectively. Note: Performance of real estate stocks In terms of news, data from the National Bureau of Statistics (NBS) showed that from January to April, national real estate development investment reached 2,773 billion yuan, a year-on-year decrease of 10.3%. Among this, residential investment was 2,117.9 billion yuan, down 9.6%. From January to April, the sales area of newly-built commercial housing reached 282.62 million m², down 2.8% YoY, with the decline narrowing by 0.2 percentage points compared to the January-March period. Tea beverage stocks weakened slightly By the close, Cha Panda (02555.HK), Tenfu (06868.HK), and Mixue Group (02097.HK) fell by 4.19%, 4.09%, and 1.40%, respectively. Note: Performance of tea beverage stocks In terms of news, most tea beverage stocks, including Cha Panda, weakened, which was related to profit-taking by some investors. Taking Mixue Group as an example, since its listing, the company's shares have risen by over 150% in total. Stocks with abnormal movements NetEase Cloud Music rises over 5%, with Q1 gross profit up nearly 14% QoQ NetEase Cloud Music (09899.HK) rose by 5.32% to close at HKD 217.60. In terms of news, NetEase Cloud Music's net revenue for the first quarter of this year was RMB 1.858 billion, with a gross profit of RMB 683 million, corresponding to a gross profit margin of 36.7%. Bilibili rises over 4%, with Q1 results exceeding expectations Bilibili-W (09626.HK) rose by 4.35% to close at HKD 146.40. CMB International released a research report stating that Bilibili announced its financial results for the first quarter of 2025, with total revenue increasing by 24% YoY to RMB 7 billion, in line with market consensus expectations. Adjusted net profit reached RMB 362 million, turning around from a net loss of RMB 456 million in the first quarter of 2024 and exceeding market expectations of RMB 248 million. For the second quarter of this year, CMB International expects Bilibili to maintain a 20% YoY revenue growth rate. Meanwhile, benefiting from the strong momentum of its advertising and mobile gaming businesses, its profit margin will further expand.