The gold market is still searching for a stable bottom after the sharp sell-off the previous week. Silver also remains extremely volatile. Although market observers see increased downside risks in the short term, several analysts emphasize that the fundamental factors that support the longer-term trend in gold and silver are still in place from their perspective. For investors, this means that the market is currently less characterized by “quiet price discovery” than by rapid changes in sentiment, technical movements and reactions to macro data.
The fluctuations of the past few days have been extraordinary. Gold recorded the second-largest weekly trading range in recent history – only the historic week of upheaval before that was even more extreme. In the meantime, however, the yellow metal has fought its way back above the mark of USD 5,000 per ounce.
The movements in silver are even more violent. On Thursday, the daily range was 27.8% according to market commentary – a figure that far exceeds the typical movements of recent years (on average just over 2% per day). Silver was also unable to establish itself above important marks: gains above USD 90 per ounce were given up again. Spot silver is trading at around USD 78 per ounce at the start of the new week, significantly above the recent lows – but at the same time still far below the highs of recent weeks.
Gold in focus: Consolidation instead of trend break?
Several voices from the market interpret the current situation as a phase of reorganisation after a previously very rapid upward movement. The commodity analysts at Commerzbank, for example, expect continued high price fluctuations in the short term, but see precious metals as “well supported” in the medium term. The core of this assessment: Even if the price movements remain confusing in the short term, the general conditions are not automatically directed against gold, according to many experts.
Other market observers argue similarly. They point out that the implied one-month volatility of silver is currently even higher than that of Bitcoin – an indication of the extent of the nervousness. Nevertheless, they believe it is possible that pullbacks will be “bought” as long as the market stabilises in a broad trading range. However, a more sustainable calming would require a phase of sideways trading to show that the speculative overheating has actually been reduced.
The assessments of the short-term price range differ. Some experts see gold initially in a range between USD 4,700 and 5,000 with decreasing volatility, but at the same time emphasise that the short-term downside risks could slightly outweigh because much of the positive has already been priced in after the rally. A clear new upward impulse needs “fresh” triggers from his point of view – such as weaker economic data, clearer signals for interest rate cuts or new geopolitical tensions.
Silver highly volatile: Why the fluctuations are even greater
Silver is traditionally considered the more volatile brother of gold – and this is exactly the pattern that is currently being shown in an extreme form. Analysts describe the fluctuations in gold and silver as an expression of deep uncertainty: Inflation and recession concerns, changing expectations of monetary policy and geopolitical risks are all weighing on sentiment at the same time. In their view, gold could remain below USD 5,000 in the short term, but they still see a possible path towards USD 6,000 per ounce for the year as a whole. It is important to add that future upward movements are likely to take place in stages – less impulsively, more frequently interrupted by corrections and more strongly supported by fundamentals.
The contrasts are currently particularly strong in the silver market: On the one hand, strong intraday recoveries, on the other hand, significant weekly losses. According to market observers, this dynamic is reinforced because silver is traded both as an “investment metal” and has an industrial component – and because the market is smaller compared to gold. This can accelerate movements in both directions as soon as large positions are built up or reduced.
However, some analysts describe the current volatility as short-term “noise”. It is to be expected that gold could test the 5,000 dollar mark again in the coming weeks and they even see room for another attempt at the previous high in the region of 5,600 US dollars in the second quarter. However, this view remains subject to conditions: An excessively strong US dollar or delayed interest rate cut expectations could slow down the recovery.
Next price drivers: US data, Fed expectations and Japan election
For the coming week, analysts expect continued high volatility – not least because of important, partly delayed economic and inflation data. These key figures are central to the Federal Reserve, which is currently aligning its monetary policy as “neutral”. The market currently predominantly assumes that the Fed could start cutting interest rates again in June. Should new data postpone this expectation, this could have a negative impact on gold in the short term – because a later easing course tends to support the US dollar and increases the opportunity costs of non-interest-bearing investments.
Outside the USA, the focus is also on the upcoming election in Japan. Observers are discussing whether the results could signal a significantly looser fiscal policy – for example, through tax cuts or higher government spending. In a country with already very high government debt, this could have an impact on bond markets and the currency and make it more difficult for the Bank of Japan to normalise monetary policy. In such an environment, the argument in the market is that gold could once again be in greater demand worldwide as a hedging instrument – especially if concerns about currency devaluation and the sustainability of government debt increase.
The bottom line is that the picture remains divided: exceptionally nervous markets with an increased risk of setbacks in the short term – and at the same time a broad camp of experts who continue to see gold and silver as supported in the medium term.
