Institutions Expect Gold Price Pullback to Last Several Months; U.S. Critical Minerals Review Is Decisive Factor for Silver Prices
Gold fell sharply again on Monday, with New York COMEX gold futures dropping 3.4% and slipping below the $4,000 mark, highlighting intense adjustment pressure in the market.
Analysts at Heraeus, a globally renowned precious metals recycling company, stated that the weakening of short-term drivers and the easing of physical shortages could cause precious metals prices to remain in a pullback for some time.
Additionally, precious metals prices have far exceeded their long-term moving averages, with gains that have been too large and too rapid. However, the ultimate depth of the price decline and the duration of the pullback remain to be seen.
Analysts noted that gold suffered its largest single-day drop since 2013 last Tuesday, falling 6.8% from its all-time high of $4,382 per ounce. Prior to that, gold had risen continuously, with a year-to-date gain of as much as 66%.
They added that if the starting point of this gold rally is traced back to late 2015, the pullback is expected to last several months. However, after reaching a stage high in 2020, gold consolidated sideways for nearly four years before breaking out.
This may pose challenges to forecasting gold’s trajectory.
Gold and Silver Trends May Diverge
Heraeus pointed out that, from a supply-demand perspective, global retail demand for gold remains strong, and the growth rate of gold holdings in gold ETFs has not shown a significant slowdown, indicating that the price decline has not dampened investors’ buying enthusiasm.
However, with India’s Diwali festival over, the buying frenzy in India has temporarily subsided.
Overall, the underlying drivers of gold investment remain intact. Analysts expect that, after a brief adjustment, the uptrend could resume if investors continue to increase their positions.
Compared to gold, investor views on silver are more divided, with many concerned that the silver market has expanded too quickly.
Heraeus analysts noted that most of silver’s decline last week occurred on Tuesday, when it fell nearly 9%. With no single catalyst behind the event, this sharp drop may signal less optimistic investor sentiment.
On the other hand, silver ETFs saw a net inflow of 13 million ounces last week, indicating signs of buying the dip.
Furthermore, with the U.S. government currently in a shutdown, the Section 232 review of critical minerals has not yet concluded. As a result, silver still faces the risk of additional tariffs, which would reverse the recent improvement in London market liquidity, redirect global silver flows to New York, and create new upward momentum for silver prices.