Zhī tōng cai jīng APP learned that northeast securities released a research report stating that previous US CPI and PPI data have weakened, and PCE inflation has fallen as expected. Following the first televised debate in the US election, Trump's chances of winning have further increased. His combination of economic policies (income tax deductions, relatively high expenditures and tariffs) could lead to greater risks for the global economy, so the overall outlook is more bullish for gold. The TC mid-year negotiations landed, and Antofagasta agreed with some Chinese smelters to set the 2025 long-term TC price of copper concentrate at 50% far below industry costs. The low TC trend continued, and the production of overseas refineries in the second half of the year may exacerbate the shortage of domestic copper concentrate, and both gold and copper are waiting for more catalysts.
Gold: PCE inflation fell as expected, and Trump's chances of winning increased, which is good for gold prices. This Friday, the closing price of London Gold is $2,326.15/oz, with a weekly increase of 0.2%.
1) US PCE inflation continues to decline. In May, US PCE inflation was 2.6% year-on-year, in line with expectations and the previous value was 2.7%. On a month-on-month basis, it remained stable, as expected, and the previous value was 0.3%; core PCE inflation was 2.6% year-on-year, in line with expectations and the previous value was 2.8%. Month on month, it was 0.1%, as expected, and the previous value was 0.2%. As previous CPI and PPI data have weakened, the market has already anticipated this PCE decline. From a structural perspective, the inflation of core goods same-month and same-year were both down due to the drag of commodity prices, and core service inflation remained down by 0.3%→0.1% month-on-month and 3.4%→3.3% year-on-year, indicating that the tight labor supply and demand situation has continued to ease. Housing inflation rose slightly from 0.3% to 0.4% month-on-month and remained around 5.4% year-on-year. Overall, it is similar to the CPI reflection, and it is expected that the US inflation will still be in a slow decline in the future.
2) After the first televised debate in the US election, Trump's chances of winning increased, which is relatively good for gold prices: On June 28th, the first televised debate between Biden and Trump ended, Biden showed more concerning physical condition, and his handling of some issues during the debate was inadequate (such as responding insufficiently to illegal immigration issues while attacking less in the relatively advantageous fields of climate and welfare policies, etc.) According to CNN polling, 67% of respondents thought Trump performed better, while the pre-debate expectation was 55%, and the changing odds in the gambling market also showed Trump winning the debate. In fact, both Biden and Trump are likely to enter a state of fiscal expansion, but Trump's combination of economic policies (income tax deductions, relatively high expenditures and tariffs) may be more difficult to sustain, and may lead to greater risks for the global economy, so the overall outlook is more bullish for gold. Currently, gold can be tracked and observed using a "mainline plus two side lines" framework: the short-term mainline is still the advancement of interest rate cuts, and July may be a key node. If the unemployment rate exceeds 4% and inflation continues to decline for the third consecutive month, the Fed's confidence in interest rate cuts may be significantly strengthened; In the two side lines, one is the decision-making of the central bank's subsequent gold purchases, which determines the strength of Chinese capital, and the other is the change in the US election, Trump's 7/11 sealing fee case judgment, whether the Democratic Party will change its candidate in August, and the second debate in September and other events may form new catalysts. The medium-term price of gold remains optimistic.
Related symbols: Zijin Mining, Shandong Gold, Yintai Gold, Chifeng Jilong Gold Mining, Hunan Gold Corporation, Zhongjin Gold Corp., Western Region Gold, Zhaojin Mining, Shandong Humon Smelting, Pengxin International Mining, etc.
Copper: Waiting for the TC mid-year negotiations to land, and for fundamentals to recover.
1) The TC mid-year negotiations are settled between Antofagasta and some Chinese smelters, and the 2025 long-term TC price of copper concentrate is set at $23.25/dmt, far below the industry cost of $40-50/dmt. After the long contract TC cut, the long-contract profitability protection of the current copper smelting industry will be lost, and the pressure on the reduction of refined copper output will increase.
2) Industrial demand heats up, shortage of copper concentrate continues, and marginal easing of scrap copper supply, waiting for the next round of catalysis from fundamentals. Under the off-season, there is a stronger wait-and-see sentiment downstream, with low-priced procurement as the main strategy. The low TC pattern continues, and the production of overseas refineries in the second half of the year may worsen the shortage of domestic copper concentrate. The scrap copper supply is shrinking, and the price difference between refined and scrap copper quickly narrows to below the reasonable level. The supplementation of supply by scrap copper will marginally ease. The tightness at the mining end is transmitted to the refined copper end, and the reasonable copper price correction drives demand-side improvement. We remain bullish on investment opportunities in the copper sector. Related symbols: zijin mining group, cmoc group limited, western mining, jiangxi copper, jchx mining management, tongling nonferrous metals group, north copper, mmg mining resources, etc.
Risk warning: the US inflation continues to exceed expectations, global monetary tightening exceeds expectations, and the appreciation of the US dollar.