Precious metals surge together, crypto assets under pressure! The logic behind the rising market risk aversion sentiment

In early December, the global financial markets experienced a significant shift: silver and copper prices both hit record highs, while stocks and crypto assets faced correction pressures. What market signals are hidden behind this trend?

Precious Metals Lead the Rally, Silver and Copper Reach New Highs

Against the backdrop of tight global supply chains, precious metal prices continue to strengthen. Silver soared to $57.87/oz, setting a new historical high, while gold also performed strongly, breaking through $4,256/oz to reach a multi-month high. Even more noteworthy, copper prices surged past $11,292 per ton, hitting a record high.

The strong performance of silver reflects deep market concerns over global supply shortages. China’s silver inventories have fallen to a seven-year low, becoming a key driver of price increases. The surge in copper prices is driven by disruptions at multiple mines, coupled with traders transporting large quantities of metals to the US market due to tariff expectations, leading to potential shortages in other regions. UBS Group forecasts copper prices could further climb to $13,000 per ton by 2026. Whether it’s silver, gold, or copper, the rise of these traditional safe-haven assets points to a common signal: the market is hedging against uncertainty.

Stocks and Crypto Assets Retreat, Safe-Haven Sentiment Dominates

Contrasting sharply with the hot rally in precious metals, the stock and cryptocurrency markets are under pressure. Before the opening of US markets on December 1, the three major stock index futures all declined: Dow futures down 0.49%, S&P 500 futures down 0.63%, Nasdaq 100 futures down 0.78%. Tech giants Nvidia and Tesla fell by 1.08% and 1.14%, respectively, and crypto-related stocks like Coinbase dropped over 3%.

Crypto assets also felt the impact. US President Trump announced on Sunday that a decision has been made on the next Federal Reserve Chair, fueling speculation that current Chair Jerome Powell might step down early. This has raised concerns about potential policy changes. Additionally, China’s renewed tightening of crypto regulations caused Bitcoin and Ethereum to plunge, with declines exceeding 5%. At press time, Bitcoin was at $86,602 and Ethereum at $2,838. In contrast, real-time data shows Bitcoin at $87,720 and Ethereum at $2,950, but market instability persists.

Bank of Japan Hawkish Signals Boost Yen, Currency Market Moves

Bank of Japan Governor Ueda Kazuo issued the clearest hawkish tone to date, indicating that the central bank will weigh the pros and cons of a rate hike in December and make an appropriate decision. Based on this, the market estimates a roughly 64% chance that the BOJ will raise interest rates at the December 19 policy meeting. This expectation immediately impacted the forex market, with USD/JPY falling 0.52% to 155.31, as the yen appreciated and became the consensus view.

Fed Inflation Data and Russia-Ukraine Negotiations, Next Week’s Focus

Looking ahead to next week, the US will release the September PCE report on December 5, a key inflation indicator closely watched by the Federal Reserve, which will provide critical guidance for policy decisions. Meanwhile, on December 1, a US delegation will visit Moscow, with Putin reaffirming Russia’s willingness to negotiate based on the US-Ukrainian issue list. Geopolitical developments will also influence market risk appetite.

Currently, the market exhibits typical safe-haven characteristics: traditional safe assets (precious metals, yen) are strengthening, while risk assets (stocks, crypto) are under pressure. This pattern reflects investor concerns over policy changes, geopolitical risks, and supply chain challenges. The coming days’ economic data and geopolitical developments will determine how long the risk aversion persists.