Precious metal prices continue to rebound.
Early Monday morning Beijing time, gold and silver prices continued their rebound. As of the time of writing,$XAU/USD (XAUUSD.CFD)$it rose more than 1.5% to USD 5,043.06 per ounce; spot silver surged 2.5% to USD 79.898 per ounce. Last Friday, silver prices soared nearly 10%, while gold rose almost 4%.
In addition, U.S. stock index futures extended their gains. As of the time of writing,$E-mini S&P 500 Futures (MAR6) (ESmain.US)$it rose by 0.29%,$E-mini NASDAQ 100 Futures (MAR6) (NQmain.US)$and increased by 0.43%,$E-mini Dow Futures (MAR6) (YMmain.US)$up 0.19%.
Recently, the precious metals market has experienced a rare 'roller coaster' trend, with gold and silver plummeting after surging, followed by another rebound. What will happen next to gold and silver prices? Will it mark the end of a long-term trend, or is it a thrilling 'stress test' in the midst of a bull market?
Institutional Views: Long-Term Bullish on Gold Prices, Caution Advised on Silver Price Volatility
Silver prices have historically been more volatile than gold due to its smaller market size and lower liquidity. By comparison, the higher liquidity of the gold market provides stronger resilience against fluctuations.
Recently, several banks and asset management institutions reaffirmed their long-term bullish outlook on gold. A Fidelity International fund manager who sold before the plunge indicated readiness to buy again, while the head of PIMCO's commodity portfolio management team also stated that gold’s upward trend remains intact.
Jason Hunter, an analyst from JPMorgan's global market strategy team, stated that the recent movement of gold prices represents a typical short-term pullback after a rapid rise, serving as a 'mid-course rest' to digest the excessively fast gains rather than signaling the end of a long-term upward trend.
Technical charts indicate that after experiencing a parabolic rise, the momentum of gold prices has shown clear signs of exhaustion. Hunter predicts that in the coming weeks or even months, gold prices will form a wide-ranging 'holding pattern.' During this period, the $5,000 mark and the $5,100-$5,150 range will act as significant resistance levels, limiting the short-term rebound potential for gold prices.
Despite facing technical corrections in the short term, the core logic supporting the gold bull market—the theme of 'currency debasement'—remains intact. Hunter noted,$USD (USDindex.FX)$The continuous operation below the 100 threshold serves as a key long-term bearish signal. As long as the US dollar remains below this level, the market is susceptible to the resumption of a downtrend starting from early 2025.
Galaxy Securities believes that this week, metal assets may continue to be in a volatile consolidation phase. Attention should be paid to the US January CPI data to assess inflation stickiness and adjust expectations regarding the Federal Reserve's policy. In the medium to long term, the core logic of the precious metals bull market remains robust. The current focus for gold has shifted from short-term interest rate speculation to hedging against long-term credit risks of the US dollar and restructuring the global monetary system. Silver’s smaller market capacity makes it more susceptible to capital manipulation, and caution is warranted against the risk of forced liquidation brought by leveraged funds. Industrial metals will be significantly influenced by the global green transition, with a favorable long-term demand structure.
Zheshang Securities stated that at the current juncture, both gold and silver face potential liquidity shocks and disturbances caused by shifts in risk appetite in the short term. However, over the medium to long term, the view that gold will outperform silver remains unchanged. In terms of operations, there is a preference to monitor volatility decline as a key indicator for repositioning. If the implied volatility of gold (Gold VIX) retreats from high levels into a relatively stable range, it typically suggests a mitigation of liquidity shocks and more orderly market pricing, improving gold's risk-reward profile. At that point, medium-term investment opportunities in gold will become more compelling.
Do fluctuations present buying opportunities for gold?
Rick de los Reyes, portfolio manager and head of commodities at T. Rowe Price, stated that the recent volatility in precious metals largely reflects consolidation following a rally rather than the end of gold's upward trajectory. The final leg of gold's recent surge was notably rapid and characterized by a significant short squeeze, causing a sharp rise in a short period. Historical patterns show that when realized volatility spikes in the short term, the market often needs time to absorb profits before entering a sideways consolidation phase, paving the way for a potential continuation of the uptrend. Under these circumstances, gold prices may remain range-bound in the short term but still hold the potential to test new highs.
Rick de los Reyes pointed out that gold’s earlier pullback and subsequent rebound also provide important clues about overall market risk sentiment. If the adjustment is related to market speculation about Kevin Warsh potentially becoming the next Federal Reserve Chair, the market reaction underscores investors' strong expectations for continued accommodative monetary policy. Any signal interpreted by the market as a tightening of financial conditions could amplify market sensitivity and trigger noticeable volatility in risk assets.
He noted that under the macroeconomic environment of 'higher-for-longer' interest rates, gold's hedging role is undergoing a structural shift. Its traditional inverse relationship with real interest rates has weakened in recent years; conversely, the correlation between gold prices and factors such as rising sovereign debt, currency debasement, and heightened geopolitical uncertainty has strengthened. Central banks' demand for gold has become a significant structural driver supporting gold prices, with notable growth in recent years, reflecting efforts by more countries to diversify their foreign exchange reserves. Although any asset can pose risks when holdings become overly concentrated, the core factors supporting gold demand have not changed unless there is a clear and sustained tightening of the global financial environment. However, based on current observations, there are no substantial indications that major central banks are rapidly moving in that direction, making the likelihood of sustained unwinding in the gold market relatively limited.
Tony Ciero, Vice President and Senior Portfolio Manager at Caldwell Securities, stated that gold prices have recently experienced a pullback following Trump's announcement of Kevin Warsh as the nominee for the next Federal Reserve Chair. Clearly, Warsh holds a more hawkish stance, advocating for a stronger US dollar and opposing quantitative easing during the financial crisis. This more hawkish approach has put pressure on investors, especially against the backdrop of a persistently weakening dollar and rising gold prices. Looking ahead, if higher interest rates lead to a stronger dollar, gold may have been overestimated. "I believe these concerns have eased somewhat at this point. Even at current levels, we remain optimistic about gold. We are seeing a good rebound in gold prices now, and in the long term, we believe the dollar will weaken and gold prices will continue to rise," Tony Ciero said.
Tony Ciero pointed out that volatility can create excellent buying opportunities. If you are confident in the fundamentals of an asset supporting its appreciation, then a price pullback can be a good entry point. "At least from our perspective, gold will continue to rise in the long term because the US intends to weaken its currency, which is positive for gold prices." Bitcoin, on the other hand, reached a peak of $125,000 last year and has since retreated to around $75,000. Bitcoin is more driven by geopolitical risks, and in risk-off environments, the riskiest assets are often the first to be sold. Ciero said, "We are seeing escalating geopolitical tensions—whether in Greenland or Venezuela—and this is putting selling pressure on Bitcoin."
However, Jim Wyckoff, Senior Analyst at Kitco Metals, believes that the gold rally lacks strong momentum and, without significant geopolitical triggers, it is unlikely to set new records. Gold, as a traditional safe-haven asset, typically performs well when geopolitical and economic uncertainty rises.
Wyckoff stated: "The silver market is currently showing a huge bullish speculative atmosphere." He added that after years of a boom cycle, gold and silver now seem to be entering a typical commodity depression phase.
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