Core Viewpoint - The significant drop in gold and silver prices on October 21, with London gold experiencing its largest single-day decline since April 2013, is attributed to trading factors rather than changes in market expectations [1][2]. Price Analysis - The report indicates that gold prices are expected to find support at the $4000 level, with a historical context provided by previous price movements in April, where gold saw significant declines [2]. - The current high for gold was noted at $4381 on October 20, and the expectation is that the price will stabilize around $4000 due to ongoing economic factors such as high U.S. fiscal deficits and declining fiat currency credibility [2]. Volatility Insights - The implied volatility of gold has decreased following the recent price drop, with the CBOE gold ETF volatility peaking at 32.78% on October 16 and then falling to 29.82% after the price decline [3]. - The expectation is that as gold enters a phase of sideways movement, volatility will continue to decrease, and stabilization may occur when implied volatility reaches around 20% [3].

Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Viewpoints - The recent significant drop in gold and silver prices is attributed to the end of silver short squeeze trading, leading to a release of short-term volatility. The mid-term outlook for gold prices remains bullish, with expectations of support around the $4000 level [8] - The market anticipates potential easing of geopolitical tensions, particularly regarding the Russia-Ukraine conflict, which has influenced market sentiment. However, the report suggests that the primary cause of the recent price drop is related to trading dynamics rather than changes in expectations [8] - The report highlights that the high U.S. fiscal deficit and ongoing debt issues will continue to drive investor interest in gold, supporting a mid-term upward trend in gold prices [8] Summary by Sections Market Dynamics - On October 21, gold prices experienced a significant decline, with London gold dropping by 6.3% to $4002.89, marking the largest single-day drop since April 2013. This was primarily due to the end of a silver short squeeze and subsequent market adjustments [8] - The report notes that the implied volatility of gold has decreased following the price drop, indicating a potential stabilization phase for gold prices in the near future [8] Price Analysis - Historical price movements are analyzed, showing that gold reached a high of $4381 on October 20, with expectations of support at the $4000 level. Previous significant corrections in April are referenced to illustrate potential price behavior [8] - The report suggests that if gold prices decline further, the risk-reward ratio for investing in gold may improve, indicating a favorable investment opportunity [8] Investment Recommendations - The report recommends focusing on leading global copper and gold mining companies, particularly Zijin Mining (601899), which is expected to see significant growth in copper production by 2026 [8]