Commodity Roundtable: The logic of "buying the dip" for gold in 2026 remains unchanged; silver is taking the lead on inflation risk; the biggest risk next year lies in the US market | Alpha Summit

December 20th, KPResearch founder and author of "Pei Feng Ke" Chen Dapeng, CITIC Futures Research Institute Co-Head Tian Yaxiong, and Zheshang Futures Chief Strategist and Head of Investment Consulting Xu Tao were guests at the "Alpha Summit" jointly hosted by Wallstreetcn and CEIBS, where they spoke with Paris Asset Management Group Chairman Yu Zhijia to discuss the future direction of the commodities market in 2026. Chen Dapeng, founder of KPResearch and author of "Pei Feng Ke", stated that many global geopolitical uncertainties have not disappeared, so the buy-on-dip logic for gold remains unchanged next year. Based on the past few years’ experience, buying on dips usually occurs after a 10%-15% pullback from recent highs. Two main factors could lead to gold price corrections next year: one is an extremely optimistic economic trend, and the other is a détente in geopolitics. However, such corrections should be viewed as buying opportunities since the structural bullish factors have not vanished. Tian Yaxiong, Co-Head of CITIC Futures Research Institute, believes that the Fed’s influence is waning and fiscal policy is becoming dominant. AI is "too big to fail", but high investment does not necessarily guarantee leaps in total factor productivity. However, AI investment is likely to continue, so inflation may fully emerge, the credibility of the dollar will be undermined, and the dollar index may break down into the 80-70 range, with commodities potentially reacting in advance. Silver has already started the race. Xu Tao, Zheshang Futures Chief Strategist and Head of Investment Consulting, cautioned that the US market may experience large fluctuations at certain stages next year. When US stocks are volatile, not only commodities but all assets will fall. Therefore, the biggest risk point for commodities next year lies in the US market, and once there is significant turbulence, commodities will also significantly correct. But these periods are often opportunities–if there’s a "big pit", it could be a good buying time. Below are the highlights of the conversation: **Chen Dapeng, founder of KPResearch, author of "Pei Feng Ke":** - In 2025, both gold and copper had unexpected moves. First, at the end of last year, the market expected the US to cut its fiscal deficit but that did not happen; consequently, gold saw a structural and cyclical bull market this year. Second, historically, copper prices usually drop 5%-10% within a year after a US rate cut. However, after the Fed’s first rate cut on September 18, 2024, copper prices surged, which reflects a structural run supported by tariffs and AI-driven inventory expectations. - Many global geopolitical uncertainties remain, so the buy-on-dip logic for gold next year is unchanged. Based on recent years, this typically means a 10%-15% pullback from highs. The factors that could cause a correction in gold are: (1) a very optimistic economic trend, and (2) a relaxation in geopolitical tensions. These corrections are buying opportunities as the structural bullish factors remain. - For copper, next year’s H1 bull narrative won’t stem from economic recovery, but from the US having 440,000 tons of visible inventory, plus post-Chinese New Year restocking, which could drive up prices. This is not a fundamental rise, and may stem from entities hoarding regardless of cost, causing shortages elsewhere. Whether recovery occurs in the second half (or later) of next year is another matter. Copper’s trading logic is thus two-step: H1 and H2 could be very different, and visibility for H2 isn’t high. - On the short end, the Fed’s rate cut in 2025 may involve more than a single move; on the long end, it may be necessary for the US Treasury and Fed to jointly suppress long-term rates by other means, or economic factors (like volatile AI expectations) could lower long-term inflation and growth forecasts. But until long rates truly fall, recoveries in traditional industry will be weak, merely spillover effects from high-investment sectors. **Tian Yaxiong, Co-Head of CITIC Futures Research Institute:** - Next year, focus on chemical products where rapid capacity expansion is leveling out, like polyester and benzene. The initial reaction of commodity prices may lag behind related company valuations, i.e., chemical ETFs may outperform the physical commodities at first. - When profits dwindle, manufacturers’ first instinct isn't to cut capacity but to cut costs (building moats, seeking incremental market share). This reflects an "romantic imagination" based on 40-50 years of past economic growth, but the future may be different; we need to recognize the potential for persistent overcapacity. - RMB internationalization may be faster than market expects. Internationalization is defined by payment tool, reserves, trade finance. Fragmented facts lately: US soybean farmers may soon accept RMB for Chinese purchases; China is gradually shifting iron ore pricing to RMB. With central bank gold buying, this trend may accelerate, with results reflected in commodity "arbitrage"—domestic prices may be weaker than overseas as there’s appreciation expectation (some expect RMB to 6.8). - US Fed's influence is fading; fiscal policy dominates. AI is “too big to fail”, but high investment won't guarantee total factor productivity leaps; AI investment will persist, inflation may surface fully, USD credibility will suffer, USD index might dip to 80-70, and commodities react early, silver taking the lead. **Xu Tao, Zheshang Futures Chief Strategist, Head of Investment Consulting:** - The current “anti-involution” round is essentially different from previous ones; it’s about shifting enterprise focus from squeezing cost at the production end, to optimizing sales and product end–improving quality and tech content to boost revenue, which is less related to commodities, yet prices rose sharply in Q3. - Looking to 2026, in the black (metals) industry chain, production of crude steel, flat glass, alloys have seen no new capacity for 2-3 years. In the price-pressed-to-cost phase, second-order feedback sensitivity on the demand side increases; thus, certain building materials and black products offer hope for next year's H2. - Globally, investment is flowing into AI, squeezing employment and consumption from traditional industries, eg US. The Fed, seeing weak data, maintains loose monetary policy, driving money aggressively into AI but not improving traditionals. Thus, in the short term, monetary policy is ineffective, amplifying asset bubbles–major volatilities may occur at certain US market stages, and when US stocks move, all assets will fall (not just commodities). This phase can also be opportunity–if there's a "big pit", may be best buying timing. - In the long term, commodity deflation likely won't return. Trade barriers push up logistics and other costs, resulting in ongoing inflation globally. From a trade perspective, there may be commodity opportunities. - Geopolitical turbulence breeds "speculative inventory" that can’t be predicted; it manifests as a pile-up of speculative inventory when prices get very low–a higher probability of inventory and price moving together. When prices hit a threshold (especially for international commodities), speculative and even excessive hoarding occurs, forming price bottoms. **Roundtable dialogue transcript highlights:** Moderator: Before we begin, let me introduce our three guests. Beside me is Chen Dapeng, founder of KPResearch and author of “Pei Feng Ke.” Next is Tian Yaxiong, Co-Head of CITIC Futures Research Institute, and farthest, but who just spoke the most, is Xu Tao, Chief Strategist and Head of Investment Consulting at Zheshang Futures. Welcome! Today’s discussion will cover five key questions, both reviews of the past and prospects for the future. We hope the dialogue today will prove enlightening. **First Topic: Unexpected Movements and Structural Volatility in the 2025 Commodities Market** Moderator: Which commodities had moves that surprised everyone in 2025? Which category saw violent volatility and surprise? Let's start with Chen Dapeng. Chen Dapeng: Thanks. My focus is mainly gold and copper. Both had surprises this year. First, at the end of last year, the market expected the US would cut fiscal deficit, but it didn’t. Gold had a structural and cyclical bull run, exceeding expectations. Second, after every US rate cut, copper has historically dropped 5-10% over the next year, but after the Fed's first rate cut in September 2024, copper soared—this is the first time it happened. This shows copper has its own structural story, driven by tariffs and AI-induced hoarding. Summing up: the US not cutting fiscal deficit led to gold's structural bull, and US copper hoarding prompted copper’s structural run—these are the two surprising points I’m watching. Moderator: How do the other two guests see it? Tian Yaxiong: I agree with Dapeng on the nonferrous and precious metals. The era is shifting from a focus on efficiency to safety-first. However, in the 2025 review, oil pricing still seemed to chase efficiency. OPEC, eager for market share, restored previous production cuts, forming a worrying surplus logic dominating oil pricing. In commodities not fundamentally bearish, oil and metals have diverged. This suggests security hasn’t wholly superseded efficiency; after the Russia-Ukraine conflict, high prices dampened demand and accelerated the shift from old to new energy, causing energy prices to retreat. Another observation: Global decarbonization and green issues are unavoidable, systemically supporting global inflation and interest rate curves, but in reality, it faces many hurdles, especially in Asia, where coal demand remains robust. Countries have long-term low-carbon roadmaps but few are initially commercializable and need subsidies. The level of subsidy signals real demand. Recently, besides Europe's carbon prices seeing a phased spike, other nations haven’t followed. Decarbonization consensus is receding, leaving energy cheap, and physical demand for new energies (bioethanol, biodiesel) has not seen transformative change. This is the market waking up after chasing long-term narratives, finding actual demand lacking. Summary: 1. Safety has not entirely overridden efficiency logic; efficiency still matters. 2. Decarbonization offers long-term hope, but short-term lacks consensus. Moderator: Thanks, Tian. You mention carbon’s impact on commodities, which links to the "Zero-Carbon China" forum I recently attended. Strict EU carbon tax implementation directly affects certain commodity trends, e.g., Chinese steel factories being tied to carbon. However, whether carbon follows EU rules is debated—more to discuss later. Now, Xu Tao, we just spoke backstage about OPEC outputs, US supply, huge changes this year, please elaborate. Xu Tao: Thanks for inviting me. First, on crude oil: US policy is clearly about increasing its own oil and gas production, and OPEC’s optimal strategy has become further production increases, shifting from price support to market share-grabbing, suppressing prices. This has played out from last year to now. On surprises: this year, Q3 saw domestic commodity prices make a sharp reversal. In Q2, they fell on demand worries, but by Q3, the “anti-involution” discussion took off. The essence this time is to shift corporate focus from production-side cost-squeezing to optimizing on the sales side—upgrading products for quality and tech to improve sales, not just who’s the cheapest. Yet commodity prices, which aren’t affected by this switch, still rose sharply in Q3. This reveals a gap with reality and was surprising to me. We need skills to discern the truth, but also trade on the illusion. **Second Topic: 2026 Commodity Investment Logic and Opportunities** Moderator: Next, which commodities are worth betting on this year, and what’s the logic behind them? Xu Tao, please go first. Xu Tao: Our research strength is in blacks (metals) and chemicals. Next year is likely the start of China’s 15th Five-Year Plan, with strong policy support. Domestically, real estate is trending down, but due to base effect, the economy next year probably goes “low at first, high later”. Real estate decline rate should slow in H2. In the black industry chain—crude steel, flat glass, alloys—no new production capacity for 2-3 years. When prices hit cost lines, demand-side feedback becomes sensitive. So there’s hope for certain H2 building materials and black metals next year. Moderator: How about you, Tian? Tian Yaxiong: This year’s catchphrase is "supply’s pricing power is unprecedentedly strong", which reflects our understanding of demand. Split commodities into macro-driven and fundamental-driven—at the industry level, demand appears "flat". Importantly, after per capita GDP passes $10,000, commodity demand shifts—China is here now, so steel, food, energy will weaken systematically. Population cycles (aging, stagnation) also dampen demand; we’re pessimistic about demand. Second, focus on "physical commodity demand driven by per-unit GDP"; the future will rely less on "iron, roads, real estate” for GDP, since these used to drive actual consumption, but the future’s growth engine is the tertiary sector, with a rising share in GDP, so its pull on physical commodity consumption weakens. So, turn back to supply: we highly focus on industries where supply-side changes are prominent. One is nonferrous metals with geopolitical narratives, the other is domestic chemicals. Of China’s 80+ commodity categories, a key label is "top player concentration". After the big production boom of 2015-2023, that boom has ended, PTA processing margins are dropping, leaders are emerging with stronger pricing power. Hence our focus is on energy chemicals where rapid capacity expansions are now leveling out, like polyester, benzene. Commodity prices may lag behind associated company stock moves, e.g., chemical ETFs running ahead of the commodity—a notable perspective. Second, there are some opportunities in agriculture. If ranking commodities, nonferrous and precious metals top, ags bottom. Pigs and eggs under pressure, may not rebound soon, but those linked to decarbonization trends are worth attention—like biofuels (plant oil), ethanol (corn, sugar)—these prices at bottom now, e.g., global raw sugar halved from 28 to 14, below ethanol cost, so if surplus continues, more cane will go to ethanol, not sugar. Chen Dapeng: My focus is only on a few categories; here’s how I see next year. Gold is a buy-on-dip asset. Reason: global geopolitical uncertainty persists. "Low" means usually a 10%-15% pullback from highs. Next year’s correction triggers are (1) very optimistic economic trend (Fed cuts rates, long-term rates fall, China stimulates), or (2) geopolitics ease. But these dips are buying chances, as the favorable structural case for gold remains. Central bank gold buying pace may change, but it's hard to foresee global central banks fully reverting to USD and US bonds. So the gold strategy is buy on dips, but accept that there may be a 10% yearly pullback; the key is whether the structural story for gold ends. When will it end? If global economic recovery is seen, then it may finish, but I don’t see this happening by 2026. Copper is more complex. Next year’s H1 copper bull isn’t due to recovery (I don’t forecast China's or US's economies clearly rebounding then), but more because the US has 440k tons of visible inventory, and post-Chinese New Year, China may restock, driving prices up. Not fundamentally driven: people are hoarding, causing shortages elsewhere. H2 or beyond, it's a separate question whether recovery occurs. So copper trading logic splits in two: H1 and H2 may diverge, and H2's visibility is low. As for oil and chemicals, I’m not an expert, but these have a cyclical and structural bearish setup. As a commodity observer, I’ll watch for possible turning points; lacking expertise, I’ll analyze when moves become clear. Moderator: Many recently ask if gold is worth buying; what do you think? Chen Dapeng: There are two buying motives for gold: allocation and speculation. For allocation, i.e., putting 3%-5% of family assets in gold, anytime is fine; spot gold is good. For speculation, e.g., futures or spot trading, use buy-on-dip or breakout strategies. For allocation, having part of assets in gold is hardly a big mistake nowadays. Moderator: In other words, global turbulence won't end soon? Chen Dapeng: I’d say so. To be frank, there’s no sign of complete easing in geopolitics. Each country has its own tech-development route; no lasting peace in global competition, and current global growth is mainly AI capex; traditional industries are weak (otherwise chemical and black prices wouldn't be where they are now). Does that mean recovery is strong? I doubt it. Only when long-term rates are seen to fall in 2026 will I believe in a firm recovery, but so far, caution is warranted. **Third Topic: Risks and Key Variables for Commodities in 2026** Moderator: We will reserve detailed analysis for later. Thanks to the teachers for their thoughts so far. Now for Q3: Risk. There are always two sides; where is the biggest risk for commodities in 2026? Xu Tao, you start. Xu Tao: The biggest risk may not be commodity supply/demand itself. In 2026, our key concern is US societal issues. Strongman politics (Trump returns) tilts US politics rightward, amplifying Democratic-Republican rivalry; next year’s midterms spell domestic chaos, resource leakages, impacting capital markets. Today, all global funds flow to AI–in the US, this squeezes jobs and consumption from traditional industries. The Fed sees weak data, keeps monetary policy loose, which concentrates funds in AI, not traditionals. So the Fed’s monetary policy short-term doesn’t work, bubbles pile up, weaving asset volatility. When the US stock market is volatile, all assets, not just commodities, fall. So the key risk for commodities next year is the US market–when big swings hit, commodity prices will drop sharply. But those dips are also likely the best buying opportunity. Moderator: Tian, your perspective? Tian Yaxiong: Over the past year, macro-pricing power is immense. I’ll focus on “visible” risks, then on “hidden” ones. Visibly: 1) AI capex bubble may burst; 2) market may over-expect domestic "anti-involution" policies. Hidden risks: first, if AI capex persists, pricing will move from leading firms to real needs, like US data center construction (BofA expects by 2030, an extra 200k tons of copper, 3m tons aluminum needed), plus energy storage construction. But is it sustainable? In 2025, 80% of US GDP growth relates to AI. AI capex is now "too big to fail", core to risk assets. What sustains this story? US fiscal supremacy, in turn resting on US Treasury stability. The risk is whether US Treasuries could fail—Fed now buys $40bn/month to support them. Is this risk eliminated? Can that trend continue? My view: before more QE, risk is in Treasuries; after QE’s restart, see if US equities are at risk; if so, systemic valuation drop follows. Second, risk in decarbonization. If countries revert to traditional energy for their own interests, initial high investment will fade as subsidies fall, impacting commodities like ethanol and some fuels. Third: latent risks not widely recognized. There is optimism about static fundamentals, e.g., surplus-priced oil already at $55-$60 range, but my strong sense is the surplus can continue, with no organic growth engine in sight. Domestically, when profits fall, producers’ instinct is not to cut capacity but to cut costs and fight for share, a legacy of the past 40-50 years’ "romantic imagination" of growth. The future may differ, and we must recognize surplus could persist. This connects to China’s stellar export data in 2025, achieved at the cost of cheap pricing. High-light exports can’t be sustained into 2026. So bear scenarios for some Chinese-price-set commodities may not end quickly. Summing up risk: 1) Watch US AI capex display; 2) watch how decarbonization consensus changes; 3) watch effectiveness of domestic “anti-involution” policy and whether deflation/surplus pricing ends. Chen Dapeng: Gold’s risk is essentially one: monitor ETF holdings daily. If ETF holdings don’t grow, short-term price is at risk, as post-rate-cut, this is the main channel for fund flows. Gold’s a buy-on-dip asset, but whether dips occur is a short-term factor. Copper is more complicated. I watch two main indicators: first, US 10Y Treasury yield—if long rates don’t drop, traditional industries do not recover. Second, the Nasdaq index: continued strength signals market faith in tech; if AI capex expectations reverse, things will worsen. Other fundamental metrics: hope US COMEX copper contango (near months cheaper, farther out higher) persists; keep COMEX-LME price spread. Changes in these mark risk. Put simply: currently, the economy is “AI strong, traditionals weak”; if both are weak, commodities will be bad; if both strong, commodities will surge. Choose one indicator to watch these; I select ones I know. Moderator: Indicators relate closely to individual expertise. Three questions summarized; now we focus on geopolitics. **Fourth Topic: Geopolitical Situation and its Impact** Moderator: I am especially interested in this topic. Chen, please start. Chen Dapeng: I’ll consider both short- and long-term. Long-term, countries understand tech and industry drive national strength, so competition continues. Past producer-consumer cooperative models are broken, with no new model in place. In the short term, could détente occur? It’s possible; with isolationism prevalent, all sides may feel confident, leading to a brief relaxation. But long-term, all countries will fight for advanced tech chains, with inevitable conflict. This is my rather pessimistic view. Moderator: For 2026, how about the short term? Chen Dapeng: No one can forecast geopolitics today; that’s bad (no visibility) and good (no one knows, so you needn’t predict, just react at critical junctures). If you look back, investing after landmark moments (like Russia-Ukraine) was never too late. Next year, a key event is in April. The right mindset is to wait for the April meeting, then discuss results. I guarantee no institution will have a strong prescience before then and asset prices will remain attractive. Moderator: So don’t gamble—bet after confirmation, right? Chen Dapeng: Correct. Geopolitical prediction is the most dangerous game now; even oil prices can diverge dramatically in months. Moderator: Tian, your thoughts on geopolitics? Tian Yaxiong: I’m not a geopolitics expert, but from a commodity mapping angle, three key clues: First, China’s food security–China depends on imports for 30% of sugar, 20% of cotton, 80-90% of soybeans. But recent years saw China build evident food autonomy, with rising reserves (“full granary”), diversified imports. China’s external reliance has dropped. So, even with geopolitical threats, ags price surges will not likely become a trend. Second, two commodity sector buzzwords: “China dominate” and “Resource Nationalism”—these can be combined. Especially advanced capacity commodities (nonferrous, critical energy metals like lithium) will remain premium, possibly reshaping China's energy strategy, with lithium as leverage, in combination with polysilicon, PV. Third, RMB: Recent research suggests RMB internationalization may accelerate faster than thought. Dimensions: payment tool, reserves, trade finance. Recent fragments: soon US soybean farmers may accept RMB for China's purchases; China’s iron ore is gradually priced in RMB. With central bank gold buying, trend may speed up. Result: “arbitrage” in commodities, e.g., domestic price weaker than overseas due to RMB appreciation expectation (agencies now expect 6.8). That sums up my three clues. Moderator: Tian, you seem especially well-versed in green energy and renewable. During Trump, US exited key energy/decarbon orgs; your take? Tian Yaxiong: My tracking is limited, mainly on US farm subsidies. Worth watching for 2026 is the US biodiesel bill (45Z, RVO). Mandated blending may shift from 20% to 40% next year, potentially meaning US soy oil won’t suffice, but the policy is yet undecided. So the market's divided, with no stable expectation. The only way to trade is trial on low prices. US ag prices are near cost–soy cost is 1130, spot is 1060; corn is 400-450, spot is 430. This gives us a chance to speculate on biofuel policy. But key indicator: US carbon price (RINs secondary market), expresses US decarbon motivation. Following and responding is more important than predicting. Moderator: Xu, your thoughts? Xu Tao: The global economy is shifting away from globalization, and from free trade to barrier-based trade. The effect on assets, especially commodities, is cost elevation. Long term, commodity deflation can’t return. Barriers raise logistics and other costs, so high inflation is here to stay; hence, commodity opportunities may arise globally. On China-US: after 2020-2023 cycle, both see supply chain security is critical. Two superpowers doubling down on their advantage sectors—China: coal, steel; US: crude oil. These sectors will run at full tilt for security, keeping output high long-term. Price-wise, these years’ steel, coal, oil price drops owe to excess supply. Once these commodities hit max output, both will hunt for what they lack globally (e.g., mining resources in LatAm, Africa). This pumps up nonferrous mining prices—countries recognize resource importance. China's long-term plan includes foreign sourcing iron ore, copper, bauxite, spodumene, Southeast Asian natural rubber through the Belt & Road; US will use tariffs to hoard resources (copper flows to US). Both will think supply chain through, run what they have, hunt abroad for what they don’t. Also, China’s 15th Five-Year Plan calls for maintaining a reasonable manufacturing share in GDP, so commodity demand has a floor. No collapse like US’s manufacturing hollowing. Real economy remains essential, so China’s commodity demand won’t fall off a cliff. Moderator: I recall the word “decoupling” was popular, maybe less now, but if things go extreme (say tariffs collapse next year), decoupling could be a risk. What impacts would that have on different commodities? Which will benefit most, which will be dampened? Chen Dapeng: Full China-US decoupling is hard to imagine, but trade friction is real. My sense (maybe wrong): trade tends to survive; US generally just reroutes shipping, so goods still go over. 2024/2025 commodity divergence is a result of economic divergence. AI, an industry growing 60%/yr, copper and aluminum benefit; China real estate and oil face structural pressures, hence black metals and oil underperform. Looking ahead, decoupling might drive up tight supply commodities, but overall, I track how "AI" and "China real estate" trends evolve, as these two will shape copper, oil, and hence overall commodity direction. Moderator: Recently, US soybean producers lamenting trade friction blocked soy sales. Products directly affected by politics/trade deals like ags, any short-term signals to watch for? Tian Yaxiong: Expanding on soybeans—whenever geopolitics heats up, there's a new global ag planting expansion; in this cycle, Brazilian soybean sowing grew from ~32m to 44m hectares, output from 120m to 170m tons. So I agree with Dapeng on “trade efficiency": As countries decouple, new “trade flows” form and they “charge at origin"; e.g., Brazil soy basis swings from -70 to +330; farmers don’t profit, but middle trade organizers (like phantom fleets) do. On decoupling's impact—trade arbitrage smooths over structural shortages and surpluses, making trade disruptions brief. In pricing, two keys: 1) fiscal policy (e.g., 1970-1980, US fiscal spend up 20-50% drove commodity indexes up >2x); 2) commodity trends mirror global manufacturing shifts (1950s USA→Germany, 1960s Germany→Japan→Asian Tigers→China via WTO, undertakes global capacity). In the past year, China’s exports to ASEAN, Africa, LATAM offset US negatives, overall exports rose, so manufacturing restructuring hasn’t arrived. If US-China decoupling triggers manufacturing overhaul, it could massively boost investment, pulling up commodity demand. So, for trading this pressure, it’s a buy signal. Moderator: Xu, your view? Xu Tao: My research angle: Decoupling destabilizes both sides' supply chains. Previously, commodity research relied on inventory cycles—now, global decoupling makes the cycles disorderly, chaotic. This breeds "speculative inventory"—when prices drop enough, speculative inventory piles up heavily. As price falls, fearing future shortage, people hoard more, so price and inventory trend together. Once price hits a threshold (especially for global commodities), someone will stockpile, even excessively, forming a price bottom. Plus, inflation disturbance: decoupling means persistent high inflation. Previously, growth paired with low inflation; going forward, high inflation lingers long-term. Moderator: So decoupling rewires analytical frameworks, affecting value, supply, and the whole chain. This extreme scenario is fascinating, but in the interest of time, let's move to the last topic: the Fed. **Fifth Topic: Fed Policy and Commodities** Moderator: Many analyses ultimately point to monetary causes; the Fed is an unavoidable factor. Please share your views. Chen, you start. Chen Dapeng: We usually look at the Fed’s short-term and long-term rates. The concern on the short end is Fed independence; on the long end, its effectiveness. First, should short rates go lower? I think President Trump’s view on rates is more correct than Powell's. There’s $400bn AI capex in play, so economic data looks good. In 2024, US GDP growth 2.5%-2.8%, this year 1.5%-1.7% (down 1pt), but AI investment up 60%, meaning other sectors lag. The Fed, relying on current data, sees $400bn AI investment, so feels no need to worry about future swings, but that’s not certain. If AI capex growth is still 60% next year, big techs would put 80-90% of cash flow into tech, a wild hypothesis. So, preemptive rate cuts seem practical. In short, rate cuts at year start may be larger than the current dot plot shows, as it assumes “AI investment is sustainable”–not because the Fed believes so, just that they act on current data. Long-term rates: After the September 18, 2024 rate cut, long-term yields went from 3.6%-3.8% to 4.1%, meaning cyclical sectors in 2025 lag 2024. Only 20%-30% of long rates respond to Fed actions, the rest to other factors. Summing up: Short-term, Fed may cut more than once next year; long-term, Treasury and Fed may need other tools to suppress, or economic factors (AI expectation volatility) could push down long-term inflation/growth expectations. But until long rates actually fall, traditional sector recovery won’t be robust, only spillover from capital-intensive sectors. These are my two focuses with the Fed. Moderator: Tian, your view? Tian Yaxiong: It's an issue of research efficiency. Previously, we saw economic investment as a single line, with the Fed firing the starter pistol. Is the Fed really so critical? Or a "blind spot under the lamp"? The precondition for focusing on the Fed is global low rates, low inflation, and all surplus countries recycling USD into Treasuries. These no longer hold. If commodities are the research target, the Fed may not remain the prime focus. When there’s an expectation gap, we can trade (eg, in late Nov, the market’s Dec cut probability jumped from 30% to 90%). Yet fiscal policy is now more ruling, more crucial. A possible 2026 scenario: AI is so interconnected, "too big to fail", but will high investment guarantee productivity jumps? If not, at what cost? The cost could be the dollar. How to price that? Silver is already charging ahead. Commodities may soon front-run a USD depreciation (to 80-70). That’s my view. Moderator: Xu, your view? Please keep it brief. Xu Tao: The Fed's monetary policy has recently declined in importance for commodity pricing, fiscal policy now matters more. Fed policy mainly affects US equities. My view: Since the US economy is heavily invested in AI, traditional sector data looks poor, promoting Fed easing. But easier money doesn’t boost traditionals, rather intensifies AI bubbles. So, monetary policy mostly expands and bursts asset bubbles, rather than boosting single-sector demand. For commodities, the effect is structural (eg, AI/energy/copper). For traditionals, direct impact is limited; falls occur mainly when the US market sells off broadly. For specific sectors or products, Fed policy now has less influence. Moderator: That's all for today. Many thanks to our guests. To sum up–the best way to predict the future is to understand the present. One hour wasn't enough, but we hope to discuss more later. Thank you all! Risk disclaimer: The market carries risks; investment requires caution. This article does not constitute personal investment advice and does not consider an individual user's specific goals, financial situation or needs. Users should independently determine if any opinions, views, or conclusions herein fit their situation. You assume all responsibility for investments made accordingly.