In our past publications released on 22nd March as well as 31st Jan we have been consistently bearish on both Gold & Silver. Since then, Gold has fallen to 4000 odd levels and Silver at 55 odd levels. We continue to remain unconvinced by many US bank’s stories of Gold seeing 5000 odd levels any time soon. At least till Sep’26 we remain bearish on both Gold & Silver and do not have any optimism on their prices. We believe that US macro data is likely to remain strong till Sep which implies rate hike probabilities wont be faded away and DXY is likely to remain bid. Both these imply a weak set up for precious metals. If hikes do materialize (and especially if such hikes are perceived as more hawkish than warranted by the data), demand for gold as a macro policy hedge could unwind more persistently as market concerns about DM central bank independence ease further. Combined with rate-sensitive ETF holders net selling into higher rates, gold prices could then reach $3,600/toz by Dec’26. This assumes a total of 50 bps hike by Fed till Dec’26 against current expectations of 32 bps of hike. With only 25 bps of hike by end CY26 we might see gold stabilising between 4000-4400 levels by end CY26. We have always been of the view that the price history of precious metals over the past two decades suggests that strong rallies, such as the one from September 2022 to January 2026 when gold gained 245%, are followed by substantial declines, even if the bulk of the gains are consolidated. Amongst the 3 factors which drove Gold prices significantly in the last bull run, only one factor still remains which is global central bank's purchases. The other two factors: 1) strong retail demand by buyers in China & India wont recover in the short term due to higher margin requirements as well as higher import duties 2) Debasement trade is nearing its end. With US Iran ceasefire deal being announced, Gold’s demand as safe haven has reduced. Even trade war fears are now minimal thus reducing the risk premium on Gold prices. To summarise, we remain unconvinced by Gold/Silver rebound theories based upon only one factor of global central bank demand. US data is likely to remain strong till Sep which implies rate hikes won’t be priced away and hence precious metals best case scenario is consolidation only around current levels +/-10%.
