Core Points - The new Japanese Prime Minister, Kishi Sanae, emphasizes strong economic measures to protect national interests, indicating a shift towards more conservative policies [1][2] - The ruling coalition formed by the Liberal Democratic Party (LDP) and the Japan Innovation Party (JIP) is expected to further align with right-wing policies, including military expansion and security legislation [2][3] - The coalition faces challenges due to a lack of majority in the Diet, which may hinder the implementation of their policies [4][6] Group 1: Government Formation and Policies - Kishi Sanae appointed conservative figures to key cabinet positions, aiming to balance party factions and strengthen her governance base [3] - The coalition's agreement includes plans to revise national security strategies and expand military capabilities, reflecting a rightward policy shift [2][3] - A new minister will oversee foreigner policies, indicating a focus on immigration and economic security [3] Group 2: Political Challenges and Public Concerns - The coalition's lack of a majority in both houses of the Diet raises uncertainties about policy implementation, as evidenced by Kishi's need to enter a second round of voting for her election [6][7] - Internal divisions exist within the coalition, particularly regarding campaign finance and electoral reforms, which could threaten its stability [7] - Public opinion is heavily focused on rising prices and political transparency, with experts warning that failure to address these issues could lead to a loss of public trust [8][10]

Report Industry Investment Rating - Gold: Neutral [8] - Silver: Neutral [8] - Arbitrage: Short the gold-silver ratio on rallies [9] - Options: Hold off [9] Core Viewpoints - With the geopolitical situation in Russia and Ukraine easing, the safe-haven premium of precious metals has faded, and the demand for gold investment may weaken slightly. Coupled with the profit-taking of investors, the prices of gold and silver are expected to be range-bound in the near term [1][8]. Summary by Relevant Catalogs Market Analysis - Geopolitical risks are easing as European leaders support a ceasefire in the Russia-Ukraine conflict through negotiations, and Japan's new Prime Minister Kishida Sanae is considering a supplementary budget to address rising prices [1]. Futures Quotes and Trading Volume - On October 21, 2025, the Shanghai gold futures main contract opened at 990.00 yuan/gram and closed at 994.06 yuan/gram, up 2.45% from the previous trading day. The trading volume was 41,087 lots, and the open interest was 129,725 lots. The night session closed at 945.44 yuan/gram, down 4.89% from the afternoon session [2]. - On the same day, the Shanghai silver futures main contract opened at 11,982.00 yuan/kilogram and closed at 11,805.00 yuan/kilogram, up 0.54% from the previous trading day. The trading volume was 1,582,985 lots, and the open interest was 424,554 lots. The night session closed at 11,285 yuan/kilogram, down 4.40% from the afternoon session [2]. US Treasury Yield and Spread Monitoring - On October 21, 2025, the yield of the 10-year US Treasury bond was 3.953%, unchanged from the previous trading day, and the spread between the 10-year and 2-year Treasury bonds was 0.508%, also unchanged [3]. Changes in Positions and Trading Volume of Gold and Silver on the Shanghai Futures Exchange - On the Au2508 contract, the long positions decreased by 522 lots, and the short positions decreased by 224 lots. The total trading volume of the Shanghai gold contracts was 695,291 lots, down 29.90% from the previous trading day [4]. - On the Ag2508 contract, the long positions increased by 2 lots, and the short positions decreased by 2 lots. The total trading volume of the Shanghai silver contracts was 2,383,616 lots, down 35.60% from the previous trading day [4]. Tracking of Precious Metal ETF Holdings - The gold ETF holdings remained unchanged at 1,058.66 tons, while the silver ETF holdings decreased by 93 tons to 15,677 tons [5]. Tracking of Precious Metal Arbitrage - On October 21, 2025, the domestic premium for gold was -31.30 yuan/gram, and the domestic premium for silver was -1,378.39 yuan/kilogram [6]. - The ratio of the prices of the main gold and silver futures contracts on the Shanghai Futures Exchange was about 84.21, up 1.90% from the previous trading day, and the ratio in the overseas market was 82.10, up 0.62% [6]. Fundamentals - On October 21, 2025, the trading volume of gold on the Shanghai Gold Exchange's T+d market was 87,030 kilograms, up 21.13% from the previous trading day, and the trading volume of silver was 2,116,166 kilograms, up 27.61% [7]. - The gold delivery volume was 16,814 kilograms, and the silver delivery volume was 139,020 kilograms [7]. Strategies - Gold: The price of gold is expected to be range-bound, with the Au2512 contract likely to trade between 930 yuan/gram and 970 yuan/gram [8]. - Silver: The price of silver is also expected to be range-bound, with the Ag2512 contract likely to trade between 10,800 yuan/kilogram and 11,600 yuan/kilogram [8]. - Arbitrage: Short the gold-silver ratio on rallies [9]. - Options: Hold off [9].

Core Points - The ruling coalition of the Liberal Democratic Party (LDP) and Komeito failed to secure a majority in the recent Japanese Senate elections, marking the first time since the LDP's establishment in 1955 that it has lost majority seats in both houses simultaneously [1][3] - Prime Minister Shigeru Ishiba stated he would continue to serve despite the coalition's losses, indicating a commitment to his role [1][6] - Analysts attribute the coalition's defeat to public dissatisfaction with rising prices, ineffective policy responses, and an aging image of traditional parties, revealing deeper crises in policy response and public communication [3][4] Election Results - The ruling coalition obtained a total of 47 seats, falling short of the 50-seat majority target [3] - The coalition's loss in the Senate follows a previous failure to secure a majority in the House of Representatives, officially transitioning to a minority government [3] Public Sentiment - Ishiba's cabinet support rate has dropped to 20.8%, the lowest since he took office, with over 40% of respondents citing a lack of leadership and policy failures as reasons for their discontent [4][6] - The decline in real wages, which fell by 2.9% year-on-year, has significantly reduced household purchasing power, leading to increased public frustration [3] Political Landscape - The absence of a mandatory re-election process for the Prime Minister in the Senate allows Ishiba to remain in power despite the losses [7] - The fragmented opposition parties are unlikely to unite quickly to propose a no-confidence motion against Ishiba, allowing him to potentially stay in office for the short term [7] Trade Negotiations - The ongoing U.S.-Japan trade negotiations are critical, with U.S. President Trump pressuring Japan for potential tariffs, which complicates the political situation for Ishiba [9] - Analysts express concerns about Japan's bargaining power being weakened due to the coalition's diminished status, complicating negotiations on tariffs in key sectors like agriculture and automobiles [9][10] Future Challenges - The ruling coalition will face significant challenges in the upcoming extraordinary Diet session, where it must secure support for the 2025 supplementary budget addressing price measures and U.S. tariff responses [10]

Core Viewpoint - The ruling coalition in Japan, consisting of the Liberal Democratic Party (LDP) and Komeito, has lost its majority in both houses of the National Diet, leading to increased pressure on Prime Minister Shigeru Ishiba and uncertainty in Japan's political landscape and foreign relations [1][2]. Election Results - The Japanese House of Councillors has 248 seats, with 125 contested in the recent election. The ruling coalition secured only 47 seats, failing to achieve a majority, marking the first time since the LDP's establishment in 1955 that it has lost majority control in both houses [2][3]. - The LDP's performance was particularly poor in local and major urban districts, winning only 14 out of 32 single-member districts, and losing significant ground in traditional strongholds [2][3]. Reasons for Defeat - Public dissatisfaction with rising prices and the government's inadequate response has been identified as a primary reason for the ruling coalition's defeat. Voter concerns about inflation, particularly in rice prices, have overshadowed other issues, with many voters prioritizing "price countermeasures" [3][4]. - The LDP's cash handout policy of 20,000 yen per person was criticized as ineffective and insufficient to alleviate the economic burden on citizens, contributing to a decline in public support for Ishiba's cabinet, which fell to 20.8%, nearing the threshold for political instability [3][4]. Shift in Voter Sentiment - There is a growing fatigue among voters towards traditional parties, with new parties like the Constitutional Democratic Party and the emerging populist party gaining traction. The former increased its seats from 9 to 22, while the latter rose from 1 to 15 [4]. - The new parties have resonated with voters by addressing issues such as tax exemptions for workers and anti-foreign sentiment, utilizing social media effectively to mobilize support [4]. Challenges in U.S. Negotiations - Despite the election setback, Ishiba has stated he will not resign, with some within the LDP suggesting that maintaining continuity in U.S. negotiations is crucial [5]. - The U.S. has indicated potential tariffs on Japan, complicating the government's bargaining position. Analysts express concerns that the weakened ruling party may struggle to secure domestic support for concessions in sensitive areas like agriculture and automobiles [6][7]. Future Governance Outlook - The ruling coalition's minority status will necessitate greater reliance on opposition parties for policy implementation, particularly in the upcoming extraordinary Diet session [7]. - There are rising calls within the LDP for Ishiba to step down, with discussions about a leadership change already underway, reflecting historical precedents where leaders resigned following electoral defeats [7].