As explained by Ole Hansen, Head of Commodity Strategy at Saxo Bank, the precious metals market has been undergoing a clear regrouping in recent months. Following a dynamic rally that propelled gold—and especially silver—to new all-time highs, both metals have entered a correction phase. This shift does not stem from a significant deterioration in long-term fundamentals, but rather from a rapid change in the macroeconomic environment following the outbreak of the war with Iran. Rising energy prices, a stronger dollar, higher inflation expectations, and the return of the “higher-for-longer” interest rate scenario in the US have created more challenging conditions for non-yielding assets.
The price of gold has dropped to its lowest level in three weeks, with selling pressure intensifying after breaking support around $4,650. Crucially, however, rising oil prices—rather than geopolitical tensions—are currently playing the dominant role. With Brent crude trading above $111, the market is focusing on the inflationary consequences of expensive energy. Amid sustained US economic growth, supported by investments in artificial intelligence, the Federal Reserve sees no urgent need to cut interest rates. An additional source of uncertainty is the earnings releases from several “Magnificent Seven” companies and the FOMC meeting, both occurring on the same day.
In the short term, market attention remains fixed on the energy sector. Brent crude prices holding above $111, coupled with a lack of progress in unblocking the Strait of Hormuz—where blockades by the US and Iran have almost completely halted transport—sustain supply tensions. Warnings regarding the scale of global energy shortages are intensifying, and the tight situation in the refined fuels market is already pushing diesel and jet fuel prices toward $200 per barrel. A key short-term catalyst for metals would be the potential unblocking of the strait and a subsequent drop in oil prices.
At the beginning of the year, Saxo did not rule out that gold could reach $6,000 by year-end. Since then, a correction of approximately $1,500 from the peak of $5,595 has altered both the trajectory and pace of this scenario. In the short term, rising oil prices and the resulting inflationary shock are strengthening the dollar and pushing back expectations for monetary easing, which limits the appeal of gold.
However, this does not signal a change in the trend. Geopolitical conflict acts as a short-term hurdle but does not undermine market fundamentals. The factors that have driven growth over the last two years remain relevant and, in some cases, have even strengthened.
The risk of stagflation persists, partly due to the energy crisis and its impact on prices and economic activity. Fiscal debt continues to grow, and while the dollar’s dominant role as a reserve currency is not directly threatened, there is a visible trend of reserve diversification by some central banks and state institutions. In this process, gold remains a natural alternative.
Unlike most commodities, gold functions primarily as a monetary asset. Price increases do not lead to a significant drop in demand, as is the case with industrial commodities. While jewelry demand may soften and central banks might slow purchases as the value of their reserves increases, gold remains structurally less sensitive to high prices than other metals.
From a technical perspective, the key support level remains the 200-day moving average around $4,250. As long as this level holds, the long-term upward trend remains intact.
The situation for silver is more complex. After a dynamic rally to January peaks, the market reached a state of being clearly overbought. Limited physical supply, strong demand from the photovoltaic sector, and an influx of speculative capital—boosted by retail investor activity—pushed prices to levels that required highly favorable conditions to be sustained.
The correction began even before the escalation of the conflict, but the war with Iran accelerated its pace. Higher oil prices strengthened the dollar, raised inflation expectations, and pushed back the prospect of interest rate cuts, creating less favorable conditions for precious metals. Silver—being more volatile and partially dependent on economic cycles—responded with a sharper decline.
From a market perspective, however, this was a healthy correction. It reduced excessive speculative positioning and decreased vulnerability to sudden price swings. Fundamentals remain supportive. According to the World Silver Survey 2026 by Metals Focus, the market will record its sixth consecutive year of supply deficit, with demand still outpacing available resources, leading to a further decline in above-ground stocks. Dwindling inventories increase the market’s susceptibility to periods of low liquidity, higher price volatility, and higher premiums.
Additionally, strong demand from China—both from the solar sector and individual investors—continues to support the market, and the current energy crisis may, in the long run, encourage investment in renewable energy sources, increasing silver requirements.
At the same time, the outlook for silver remains more intricate than for gold. Industrial demand is sensitive to the economic cycle, and persistent high inflation combined with slower economic growth may limit consumption in sectors such as electronics or industrial manufacturing. Furthermore, investment demand—crucial for maintaining the deficit—can be volatile and may quickly reverse with a shift in market sentiment.
This is precisely why silver remains a high-volatility metal: it offers greater growth potential but carries higher risk.
As geopolitical tensions fade and energy supply chains stabilize, gold should once again benefit from monetary demand, reserve diversification, fiscal concerns, and ongoing geopolitical uncertainty. It is less sensitive to cyclical demand drops and less prone to sudden shifts in investor sentiment.
Silver remains fundamentally attractive, but its prospects depend more heavily on the health of industrial demand and investor activity. The market may tighten again, and in a favorable macroeconomic scenario, silver could once again outperform gold in terms of returns. However, this path will likely be more volatile.
The current gold-to-silver ratio of approximately 62 suggests that silver is relatively expensive compared to the long-term average near 70. This means that to significantly outperform gold, a new catalyst will be needed—whether in the form of further supply constraints, stronger industrial demand, or a return of speculative interest.
Thus, the bull market in precious metals appears paused rather than over. Gold is delayed but not stopped, and its fundamentals remain strong. Silver still offers significant growth potential, but after previous excesses, it remains more sensitive to macroeconomic factors and shifting investor moods.
In practice, this means gold remains a key component of strategic allocation, while silver serves a more tactical role—offering higher risk and potentially higher returns.
