Spot Gold Falls Below $4500, Silver Drops Nearly 5% intraday

Due to market expectations that interest rates will remain high,spot gold continues to fall, breaking below $4,500 per ounce, with a daily drop close to 2%. Spot silver falls below $74 per ounce, with a daily drop close to 6%. Spot platinum drops by nearly 3%, to $1,920.77 per ounce.

U.S. gold stocks opened broadly lower, with Windlera Mining falling over 4%, and Newman Mining falling over 3%.

The energy shock caused by the Iran war is evolving into persistent inflationary pressures, sovereign bond yields soar to a decade high, the U.S. 30-year Treasury yield rises to 5.177%, the highest level since 2007. The Japanese bond market further weakens. The Japanese 10-year and 30-year yields rise by 5.5 basis points, to 2.795% and 4.155% respectively; the Japanese 20-year bond yield increases by 6.5 basis points, to 3.78%.

Market participants warn that sustained high oil prices may force central banks to further tighten monetary policy, the expectation of "higher for longer" interest rates is spreading globally.

As for the precious metals market, earlier, the Morgan Stanley commodities research team released a report, believing that the structural bull logic for gold has not been destroyed—the themes of currency devaluation, U.S. fiscal risk, and geopolitics are merely "on hold".

The bank expects that after the Strait of Hormuz reopens in June, the tail risk of energy inflation will decrease, the market's overpricing of Fed rate hikes will be corrected, and gold is expected to challenge $4,900 to $5,100. Maintaining the target of $6,000 for the fourth quarter, with a full-year average forecast of $5,243.

However, Morgan Stanley believes that the core logic of silver outperforming gold in the past—extreme physical market tightness—has essentially failed: COMEX inventories have returned to 2024 levels, and spot liquidity in London is abundant.

More critically, China's photovoltaic industry has accelerated the advancement of silver-saving technologies after the cancellation of export tax rebates, and Morgan Stanley expects a decline in solar silver demand of about 30% this year. The silver market is set to shift from a deficit to balance this year after five consecutive years, and even a slight surplus next year. The gold-silver ratio is predicted to rise to around 75:1 by the end of next year.