The rebound in gold and silver is unlikely to continue! Geographic and macroeconomic backgrounds are unrealistic, qualitative changes are difficult to return to historical highs, and the road ahead is difficult

The Zhitong Finance App learned that precious metals prices have recently rebounded after experiencing a period of continuous selling pressure. In early trading on Wednesday, the price of spot gold rose by about 2.4% to $4119.04 an ounce; the price of spot silver was $59.47 per ounce, up about 6.3% from $55.9 an ounce last weekend.

However, analysts said that gold and silver prices may still face a difficult path if they want to return to the historical highs set earlier this year. Dutch International Group (ING) commodity strategists Warren Paterson and Eva Mantey said in a report on Wednesday that the rise in gold and silver was mainly due to “buying on dips after recent price weakening,” not “substantial changes in the geopolitical or macroeconomic context.”

Silver may outperform, and gold may continue to be sluggish

Despite previously experiencing a sharp rise throughout 2025 and continuing until this year, the two precious metals, gold and silver, are still far below the historical highs set earlier this year. Both gold and silver hit record highs at the end of January. At that time, the spot gold price hit 5589.38 US dollars per ounce, while the price of silver reached 121.67 US dollars per ounce.

Maintaining high interest rates and a stronger dollar weakened the attractiveness of precious metals, while the rise in oil prices due to the war in the Middle East also further changed the flow of capital and transaction logic in other areas of the market. Paterson and Mantai said, “Although the tense situation in the Middle East still supports precious metals, the market is weighing the relationship between weakening US economic data and the risk of inflation brought about by rising energy costs.”

The two analysts added that gold “will probably remain highly sensitive to changes in the energy market and expectations of US monetary policy.” However, they said that if the industrial metals market continues to strengthen while safe-haven demand persists, silver “may continue to outperform gold.” They said, “Silver's performance not only reflects its safe-haven properties, but is also supported by improved overall sentiment in industrial metals, particularly driven by the performance of the copper market.”

In contrast, Bank of America analysts believe that after recording the worst quarterly performance in 13 years in the three months to the end of June, there is still a risk that the price of gold will fall further. The Bank of America said in a July 16 report: “The death cross signal, high net long positions, and similar characteristics of a major top market all increase the risk of a longer and deeper market correction.” A “death cross” is a technical pattern where a stock's short-term moving average — usually a 50-day moving average — falls below a long-term moving average, usually a 200-day moving average.

However, UBS is skeptical about the potential for a rebound in silver and reminds investors not to rush into silver investment positions. The Swiss bank lowered its silver purchase price target, which it considered attractive, to the 48 to 50 US dollars/ounce range from about 55 US dollars/ounce previously.

UBS strategist Dominique Schneider wrote in a July 20 report: “We believe that the short-term headwind factors facing silver may persist as escalating Middle East tension, higher opportunity costs, and a strong dollar will continue to weigh on investor sentiment.” “Judging from the macro environment, the background facing silver did not provide sufficient impetus for investors to increase their long positions. In the face of unstable investment demand, the price of silver has yet to find a firm bottom.”

Mining companies: long-term prospects for gold and silver are still bright

Meanwhile, Diane Garrett, executive chairman and CEO of US gold and silver developer Hycroft Mining, said in an interview on Tuesday that the recent decline in gold and silver prices was a “normal adjustment,” adding, “This is not a broken bull market.”

“The fundamentals of the commodity market are still very strong, especially gold, as it has surpassed US Treasury bonds as the number one asset class, and is becoming the infrastructure of the financial system,” she said. “People don't want to hold hard assets backed by other countries' debt, and we've seen central banks continue to buy gold for 17 months. The data is very persuasive.”

She added: “The same is true of silver, because it is not only a monetary metal, but also an industrial metal. It's driving the artificial intelligence revolution and the development of supercomputers — all of which require silver, and there are no alternatives.”