Morgan Stanley Fund: The implementation of Trump's policies may lead to a second inflation in the United States, still optimistic about the subsequent upward space for gold

According to the Zhitong Finance APP, Morgan Stanley Fund stated that the upward space for gold has reopened after this round of adjustments. If Trump's related policies are truly implemented next year, there is a possibility of a second inflation or stagflation in the United States. Both situations would support gold prices to continue rising. His series of policy slogans, including global tariff increases, domestic tax cuts in the U.S., and the expulsion of immigrants, may lead to difficulties in reducing inflation in the U.S. Meanwhile, concerns about the long-term weakening of the dollar's credit have not been eliminated. Therefore, they remain optimistic about the subsequent upward space for gold.

In September of this year, the Federal Reserve began this round of interest rate cuts, lowering rates by 50/25 basis points in September and November, respectively. Currently, the market is pricing in a roughly 50-60% probability of a 25 basis point rate cut in December, and this probability will change as the date approaches. There is also a possibility that there will be no rate cut in December, while the market is pricing in 2-3 rate cuts next year. The expectations for rate cuts have seen a certain decline compared to earlier periods, and the pace may be pushed back.

Morgan Stanley Fund stated that during the interest rate cut cycle, gold is a relatively certain beneficiary, showing a certain negative correlation with medium to long-term U.S. Treasury yields. It tends to lead the onset of the rate cut cycle and appears in the bottom region after the peak of rate hikes, with gold performing particularly strongly in recession trades. From a medium to long-term perspective, concerns about the weakening of the dollar's credit, along with the continuous gold purchases by central banks around the world in recent years, jointly support the notion that gold prices are more likely to rise than fall. For precious metals, industrial metals, crude oil, and other commodities, prices are determined by both financial attributes and commodity attributes.

From the perspective of financial attributes, commodity prices generally show a certain negative correlation with the U.S. dollar index. A stronger dollar leads to significant adjustments in commodities; not only has gold fallen, but LME copper also briefly dropped below $9,000 per ton, and Brent crude oil fluctuated around $70. The interest rate cut cycle significantly benefits interest rate-sensitive assets under the influence of financial attributes. If, during the rate cut process, the economy does not improve or further slows down, or even concerns about recession arise, there may be weakness in commodity prices such as industrial metals due to worries about falling terminal demand. If the economy rebounds after the rate cuts, leading to improved demand and further upward movement in commodity prices, this needs to be analyzed gradually. From the perspective of financial attributes, close attention will be paid to the future strength and weakness of the dollar and the pace of the Federal Reserve's rate cuts.

From the perspective of commodity attributes, the long-term price trend of commodities is ultimately determined by the supply and demand relationship. Therefore, in the medium to long-term outlook, Morgan Stanley Fund focuses more on the calculations of supply and demand for commodities, including the future release of new production capacity for ores and resources, the operational status of existing mines, trends in cost centers, industry capital expenditure expectations, and for energy commodities like crude oil, more attention needs to be paid to the production policies of major oil-producing countries like OPEC+, as well as changes in geopolitical conflicts. From the supply side, the supply of copper remains tight, while there are concerns about supply releases for energy commodities like crude oil. On the demand side, attention is paid to global economic outlooks and changes in economic trends, especially the impact of domestic economic data in China on the demand for industrial metals. Morgan Stanley Fund will continue to closely track and monitor the growth trends of downstream terminal demand for commodities, such as the growth rate of downstream grid investments, changes in the prosperity of sectors like home appliances, automobiles, and real estate, as well as future domestic policy expectations and changes in economic support policies that may drive marginal improvements in industrial metal demand In summary, Morgan Stanley Fund believes that at this stage, attention should be paid to the layout opportunities for gold after its sharp decline. Looking ahead to next year, there may still be potential opportunities for the prices of industrial metals such as copper