Guotai Haitong: Interest rate cuts open up a bottom line, adding flexibility to the properties of non-ferrous commodities

According to the Zhitong Finance APP, Guotai Haitong released a research report stating that the Federal Reserve is expected to cut interest rates by 25 basis points as scheduled. Its dot plot for interest rate forecasts indicates the possibility of two more rate cuts in 2025. This positive development boosts market risk appetite, but gold prices may face short-term fluctuations under pressure. In terms of industrial metals, with overseas liquidity easing and domestic policy space widening, the supply and demand dynamics for industrial products are improving, presenting potential opportunities for investment in the sector.

Guotai Haitong's main viewpoints are as follows:

Cycle Judgment: In September, the Federal Reserve cut interest rates by 25 basis points to a range of 4.00%-4.25%, which aligns with market expectations. Coupled with recent decent performance in U.S. economic data, concerns about a recession have significantly eased. As market risk appetite increases and some bulls take profits, gold prices may experience fluctuations under pressure. Regarding industrial metals, the U.S. rate cut has led to marginal easing of overseas liquidity, while domestic policy space has also widened, awaiting the continued release of macroeconomic benefits. Additionally, as we gradually enter the traditional peak season and the stocking phase before the dual festivals, the processing operating rates of industrial products such as copper and aluminum continue to rise, while supply-side disruptions frequently occur, strengthening the supply-demand dynamics and presenting potential investment opportunities in the sector.

Precious Metals: U.S. rate cut benefits realized, gold prices under pressure. The Federal Reserve announced in its September meeting that it would lower the federal funds rate target range by 25 basis points to 4.00%-4.25%, in line with market expectations. The Fed's dot plot for interest rate forecasts shows that two more rate cuts are expected in 2025, while also raising its expectations for U.S. economic growth. Furthermore, recent U.S. retail sales have exceeded expectations, and the number of initial jobless claims for the week of September 13 also fell more than expected, gradually reducing market concerns about a U.S. recession. In the short term, as some bulls take profits and market risk appetite rises, gold prices may face fluctuations under pressure. However, in the medium to long term, risks related to U.S. federal government debt remain, the status of the U.S. dollar faces challenges, and under the restructuring of the global monetary system, gold still has opportunities for sustained performance.

Industrial Metals: Strengthening supply-demand dynamics, pullbacks present investment opportunities. On the macro front, the Federal Reserve's rate cut has reopened the door, with two more cuts expected in 2025, totaling about 50 basis points. Domestic macroeconomic data in August performed relatively steadily, with policy effects continuing to manifest, and the space for future domestic policy operations may widen. Market liquidity is easing, and increased risk appetite will benefit industrial metal prices. In terms of supply and demand, we have recently entered the traditional peak season, with processing rates for industrial products such as copper and aluminum continuously rising, and stocking demand before the dual festivals increasing. At the same time, frequent supply-side disruption events are expected to strengthen the supply-demand dynamics. In the short term, the sector may provide good opportunities for investment due to pullbacks following the realization of overseas macro benefits.

Risk Warning: Downstream demand weaker than expected, large supply-side releases, and the pace of Federal Reserve rate cuts not meeting expectations