Despite gold and silver hovering at high levels, Ole Hansen, head of commodity strategy at Saxo Bank, remains bullish on the long-term trend of metals.

Hansen released a report on Tuesday (June 18) stating that gold prices rose nearly $250/ounce from their February lows to above $2,450/ounce, and investors and traders are now breathing a sigh of relief.

Hansen added that although gold has lost some momentum, there is very little bearish sentiment in the market as investors and fund managers do not see the need to take profits.

He explained that many hedge funds were in the market when the gold price was still below $2,200/ounce. This sentiment helped support the strong resistance around $2,300/ounce.

"Clearly, most of the price gains in February and March were supported by strong demand from money managers such as hedge funds. As they bought into the rally early on, they were not forced to adjust (sell) positions because the current correction phase kept prices at levels that otherwise would have forced them to reduce exposure," he said in the report.

Hansen added: "Entering the market early and at lower levels helps explain why the current volatility in gold is relatively low compared to other metals such as silver, platinum, and copper. Speculators in these metals entered the market later and at higher prices, making them more vulnerable to long liquidation and facing the risk of deep corrections."

Looking ahead, Hansen said that as geopolitical risk uncertainty continues to affect the global economy, gold will continue to serve as a safe-haven asset and a hedge against market risk, becoming one of the biggest support pillars in the market.

At the same time, Hansen said that the growing sovereign debt is also forcing central banks around the world to continue to diversify their foreign exchange reserves and reduce their dependence on the US dollar.

As for how long the long-term consolidation of gold and silver will last, Hansen said it depends on the Fed. He pointed out that despite continued support from Asian retail investors and central banks, the market still lacks a key element: investor demand.

Hansen said, "ETF investors' interest in gold and silver is still limited, and since the FOMC started actively raising rates in 2022, ETF investors have mostly been net sellers, which increases the cost or opportunity cost of holding non-interest-paying metal investments. ETF investors' demand may remain subdued until interest rates fall and costs come down."