According to the Zhitong Finance APP, recently, Li Gangfeng, a special analyst for the European Natural Resources Fund Commodity Discovery, stated that as of last Tuesday, the net long positions of gold, silver, platinum, palladium, and copper in U.S. futures metals have fully rebounded. At the time of writing, the market believed that the probability of the Federal Reserve maintaining interest rates unchanged on January 29 was 99.5%, and the first rate cut is likely to occur between May and July, with further cuts possibly in October or December. According to current technical analysis, gold prices remain strong, and the first quarter may potentially be the best-performing quarter of the year; traditionally, the second and third quarters are weak seasons for gold, which may lead to significant fluctuations and adjustments (declines).
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/255cafad6165f4d85f6c4cbd861a4f4c.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/255cafad6165f4d85f6c4cbd861a4f4c.jpg"/>
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/2c2ee8e37c89945f090b6eaa523b1003.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/2c2ee8e37c89945f090b6eaa523b1003.jpg"/>
Data Source: CFTC/LSEG Workspace
*For comparison purposes, the metal equivalent of COMEX gold is divided by 10, and the metal equivalent of COMEX silver is divided by 100.
**Currently, the reference for Nymex palladium is very low.
As of last Tuesday, the net long positions of gold, silver, platinum, palladium, and copper in U.S. futures metals have fully rebounded.
The net long positions of U.S. gold funds increased by 7% week-on-week; meanwhile, the short positions fell by 25%, resulting in the fund's holdings rising from a net long of 605 tons to 661 tons, the highest level in the past five weeks, and it has been net long for 66 consecutive weeks (previously net long for 46 consecutive weeks), which is also 73% of the historical peak of 908 tons in September 2019. As of January 14, the dollar gold price has accumulated a rise of 2.0% this year (last week +0.9%), while the fund's long positions have accumulated a rise of 13.1% during the same period (last week +5.5%).
Silver, which has a high correlation with gold prices, has always been more volatile than its rich cousin. The net long positions of U.S. silver funds increased by 7% week-on-week; the short positions fell by another 2%, resulting in the fund's holdings rising from a net long of 3,983 tons to 4,479 tons, the highest level in the past five weeks, and it has been net long for 45 consecutive weeks, also reaching its peak period of 29. As of January 14, the dollar silver price has accumulated a rise of 3.5% this year, with silver fund longs accumulating +20.2% (last week +12.7%) and shorts accumulating a decline of 20.8% (last week -19.1%).
The net long positions of U.S. platinum funds fell by 17% week-on-week; however, since the short positions also fell by 24%, the net long positions increased from 9 tons to 11 tons. Historically, U.S. platinum funds have maintained net short positions for the longest time, continuously for 31 weeks (from April 2018 to October 2018).
The net short positions of U.S. palladium funds have risen to 36 tons. The author believes that even though the bull market for palladium has ended, as long as palladium maintains a significant net short position, it may still be relatively difficult for other precious metals to completely reverse their trends. The holdings of U.S. palladium funds have been in net short positions for 109 consecutive weeks, marking the longest net short period in history
The fund's net position in U.S. futures gold has risen 17% year-to-date (cumulative increase of 35% in 2024)
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/76de522152c065fd670e7a73d40900e8.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/76de522152c065fd670e7a73d40900e8.jpg"/>
Data source: CFTC/LSEG Workspace
The fund's net position in U.S. futures silver has risen 71% year-to-date (cumulative decrease of 1% in 2024)
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/ac80a51d0771bdb33cba982b52246450.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/ac80a51d0771bdb33cba982b52246450.jpg"/>
Data source: CFTC/LSEG Workspace
The fund's net position in U.S. futures platinum has increased year-to-date (cumulative decrease of 152% in 2024)
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/301fd02af02a842450a09ed7a019916b.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/301fd02af02a842450a09ed7a019916b.jpg"/>
Data source: CFTC/LSEG Workspace
The fund's net position in U.S. futures copper has increased year-to-date (cumulative decrease of 132% in 2024)
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/7c5b59e195266e37888c28df103fe038.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/7c5b59e195266e37888c28df103fe038.jpg"/>
Data source: CFTC/LSEG Workspace
Basically, from the above chart, it is clear that despite the rise in global inflation over the past few years, the prices of various metals have declined to varying degrees. The main reason is that the futures market lacks funds to go long and drive the leverage effect. If someone had a crystal ball years ago and knew that global inflation would surge this year, along with wars and various uncertainties, and went long on precious metals in the futures market, they would likely have lost money. Ironically, since the pandemic spread globally in 2020, the net long position in precious metals in the U.S. futures market has continuously declined, reflecting that funds are purposefully preventing precious metals from rising.
The CFTC weekly report on U.S. copper has been available since 2007. Since copper was in a bear market from 2008 to 2016, it is not surprising that the historical net position of U.S. copper has mostly been at net short levels. However, starting in 2020, due to the global pandemic affecting supply and mining operations, along with market expectations of strong demand for copper from electric vehicles, copper prices rose and even reached new historical highs. But currently, the global investment philosophy is that the world is entering an economic recession, leading to reduced demand for commodities.
The net long position of copper funds has seen a sharp decline, and it cannot be ruled out that the introduction of economic stimulus policies in China in the first quarter of 2025 may provide support for copper prices. However, it is expected that by the second half of the year, U.S. copper will see a net short position from funds
If you ask ten industry experts, I believe nine out of ten would be optimistic about the prospects of copper, but I am that tenth one. 2024 may be the last good year for copper, and starting next year, there may be a significant decline – because the current copper price is not cheap for China's midstream manufacturers and downstream demand, and they will continuously seek cheaper alternatives (such as aluminum). Unless India, the United States, the Middle East, or Africa undergo a large-scale infrastructure revolution, copper prices may primarily trend downward in the coming years.
I have updated the indicators for gold mining stocks that have important implications for short-term gold prices. Last week, the ratio of USD gold prices to North American gold mining stocks saw a decline:
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/b89a7d839632c40a50fd8ba8bd4a9c18.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/b89a7d839632c40a50fd8ba8bd4a9c18.jpg"/>
Data Source: LSEG Workspace
As of Friday (the 17th), the gold price/North American gold mining stock ratio was 18.37X, down 0.8% from 18.51X on the 10th, with a cumulative decline of 4.0% this year. It is expected to rise by 16.5% in 2024. The cumulative increase for the entire year of 2023 was 13.2% (2022: +6.4%), indicating that mining stocks have underperformed physical gold for at least three consecutive years.
In fact, since 2009/2010, the performance of mining stocks has consistently lagged behind the commodities themselves, and in recent years, even oil and natural gas production companies have shown similar trends. I believe one reason for this is the growing emphasis on environmental, social responsibility, and corporate governance (ESG) in the investment community. For example, in 2021, Blackrock committed to the UK Parliament not to invest in coal and oil production companies, and they are certainly not the only fund company that has pledged to invest only in companies and industries that place greater importance on ESG.
Now that Trump has been elected, theoretically, this is good news for mining companies, as the market believes Trump prioritizes engineering development over environmental protection (speculative attention can be paid to some projects in the U.S. that have not been developed for various reasons, with the market anticipating a green light from policies). However, the problem is that the market also believes that the financial market will see a strong dollar and reduced consumption (due to increased tariffs), which is unfavorable for commodity prices. Moreover, in a market environment that is bullish on U.S. stocks, the mining sector can continue to be overlooked. The future price of copper depends on whether the U.S. will push for large-scale infrastructure projects again.
I believe that tracking overseas gold mining stock prices is one of the more reliable forward-looking tools; if gold prices continue to rise but gold mining stocks experience a sharp decline, caution is warranted.
<h2>Gold-Silver Ratio</h2>
The gold-silver ratio is one of the indicators measuring market sentiment. Historically, the gold-silver ratio has operated at levels of approximately 16-125 times:
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/1c7e5e44eab4791494dbf706b808c371.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/1c7e5e44eab4791494dbf706b808c371.jpg"/>
Data Source: LSEG Workspace
Generally, the more panic in the market, the higher the gold-silver ratio will be. For example, in 2020, due to the global spread of COVID-19, the gold-silver ratio once surged past the historical high of 120 times.
Last Friday, the gold-silver ratio index was 89.0, up 0.6% month-on-month, down 2.0% year-to-date, and up 4.7% for 2024. The cumulative increase for 2023 was 14.0%, indicating that silver has underperformed gold for at least two consecutive years, reflecting the market's sustained high level of risk awareness.
It is important to note that both the ratio of the US dollar gold price to North American gold mining stocks and the gold-silver ratio have clearly shown a trend of bottoming out and rebounding. The financial market has evidently entered the economic recession trading phase.
<h2>The US may maintain interest rates in January</h2>
At the time of writing, the market believes that the probability of the Federal Reserve maintaining interest rates unchanged on January 29 is 99.5%, the same as last Friday:
<img src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/00e0a638c4877cd8f13a835f395116a9.jpg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="Image" original-src="https://imageproxy.pbkrs.com/http://img.zhitongcaijing.com/images/contentformat/00e0a638c4877cd8f13a835f395116a9.jpg"/>
Image source: LSEG Workspace
The first interest rate cut is likely to occur between May and July, and if there are further cuts, it could be in October or December.
After a long period of verification, the futures market's predictions regarding the trajectory of US interest rates, especially long-term expectations, are generally incorrect. Therefore, I boldly anticipate that the number of interest rate cuts in the US next year will exceed current market expectations, especially if a stock market crash occurs next year.
It is expected that in 2025, we will see a struggle between Trump and the Federal Reserve, which may bring volatility to the US dollar and theoretically benefit gold prices.
The reasons for gold's outstanding performance in 2024 mainly include market concerns about geopolitical issues and, more importantly, the belief that the US is entering a rate-cutting cycle. Not only does the opportunity cost of holding gold begin to decline, but the US dollar is generally weak before Trump wins the election. Therefore, last year saw strong demand from global central banks and investors.
According to current technical analysis, gold prices remain strong, and the first quarter may potentially be the best-performing quarter of the year; traditionally, the second and third quarters are weak seasons for gold, which may lead to significant fluctuations and adjustments (declines).
Additionally, recently, China's gold prices have started to recover to higher levels compared to international prices. In the context of a challenging global economy over the next four years, buying during periods of weakness in gold prices could be a strategy to consider.
Since the market is concerned about the US balance sheet and the dollar, no matter who becomes president, the historical tide cannot be changed. During Trump's previous presidency, the national debt increased by $7.8 trillion, coupled with tax cuts and no restrictions on other expenditures, leading to a historical record, making him the third president with the most severe growth in fiscal deficits during his term.
However, from an investment perspective, fundamentals are not important; what matters is what the market believes at this moment. The market believes that if Trump is elected, the US dollar will rise, bond prices will fall, commodities will decline, and US stocks and digital currencies will rise.
Earlier this year, I predicted in this column that if Trump is elected, the market may give him a six-month honeymoon period, so the strength of US stocks and digital currencies may last until around the end of April next year; as for metals, unless geopolitical tensions rise again, it may have already passed its short to medium-term peak
According to historical statistics, the average return on gold prices in the first year of each U.S. president's term is just over 1%, making the first year often the worst-performing year of the four-year term.
The biggest test in the next 12 to 24 months will be if the U.S. starts to cut interest rates, but inflationary pressures begin to rise again. What direction will the Federal Reserve take?
In scenarios where the U.S. begins to cut spending in 2025, the U.S. stock market may experience a significant decline, the Federal Reserve's interest rate cuts may be less than expected, and geopolitical risks increase, there is little doubt that the U.S. dollar will rise or maintain high levels.
From March to May 2025, the global financial markets may experience significant volatility (decline). It is recommended to gradually reduce risk assets during these months to preserve gains and maintain stability

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Li Gangfeng, an analyst at the European Natural Resources Fund, stated that the Federal Reserve is expected to maintain interest rates on January 29, and gold prices may perform strongly in the first quarter, becoming the best quarter of the year. Technical analysis shows that gold prices remain strong, but traditionally, the second and third quarters are weak seasons for gold, which may lead to fluctuations and adjustments. As of last Tuesday, the net long positions in funds for metals such as gold and silver have rebounded comprehensively, with gold fund bulls increasing by 7% week-on-week, bringing holdings to 661 tons, the highest level in the past five weeks

- The article discusses the recent rebound in net long positions for gold, silver, platinum, palladium, and copper in U.S. futures markets, with expectations of a stable interest rate from the Federal Reserve on January 29.  
- It highlights the potential for significant fluctuations in precious metal prices, particularly in the second and third quarters, while noting the historical context of these trends and the impact of geopolitical concerns and economic policies.  
- The author suggests that 2024 may be a pivotal year for copper prices, with a warning of possible declines in the following years unless substantial infrastructure investments occur.

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European Natural Resources Fund: The Federal Reserve is not expected to cut interest rates in January, and gold prices are expected to remain strong in the first quarter