Gold and silver: still boxed in, waiting for the next catalyst

Mid East Info

19 hours ago

Ole Hansen, Head of Commodity Strategy, Saxo Bank
Gold (+26% YTD) and silver (+30%) continue to trade in tight ranges, with low summer liquidity and a mixed macro backdrop keeping realized volatility muted. Both metals remain well-supported but without the clear trigger needed to break higher. Traders are left scanning the horizon for the next catalyst, with this week's Jackson Hole gathering and Fed Chair Powell's keynote speech likely to be the immediate focus.
In recent weeks, some key U.S. economic data have surprised to the downside, while a stronger-than-expected PPI print reminded markets that inflationary pressures may still emerge from Trump's tariff policies. While that print temporarily cooled expectations for a larger or faster series of rate cuts, the market is still pricing a high probability of a 25 bp cut at the September FOMC meeting, but the path beyond remains uncertain. Powell's Jackson Hole remarks will therefore be scrutinized for any shift in tone, especially on the Fed's tolerance for inflation if growth continues to soften. In addition, markets are watching who President Trump will appoint to replace Powell when he steps down early next year. One thing seems certain: the next Fed chair is likely to be more responsive to White House pressure. Notably, just last week Secretary of State Scott Bessent called for a 150-basis-point rate cut.
For gold, this uncertainty combined with a summer holiday market, has translated into a stand-off, resulting in a range bound market which for the last three months has seen the price pivoting around USD 3,350, underpinned by steady investment demand, note total holdings of bullion-backed ETFs has risen to a 25-month high at 2,882 tons (Source: Bloomberg), and persistent albeit more moderate central bank buying, but rallies have been capped by the combination of recent, now fading dollar strength and 10-year Treasury yields holding firm. Silver, too, has lacked momentum, with industrial demand and structural deficits, together with strong underlying technicals offering support, but with speculative longs showing reduced appetite to press the upside in the absence of a fresh driver.
Flows remain constructive
Despite the range-bound price action gold remain healthy. Global gold-backed ETFs saw inflows in the first seven months of the year 259 tons, the largest since 2020 when 772 tons where added, while bar and coin demand remains firm. Central banks continue to add to reserves, with the expectations pointing to fourth annual increase of more than 1,000 tonnes. This steady and record-breaking accumulation provides a solid base, reducing downside risks even as macro headwinds ebb and flows.
Silver has also benefitted from a supportive backdrop, though with nuances. Industrial fabrication demand is still forecast to rise by around 3% this year, driven by electrification and solar, even as photovoltaic manufacturers reduce per-cell silver loadings through 'thrifting.' The market is set to remain in deficit for a fifth consecutive year in 2025, though narrower than in 2024.
The absence of conviction in positioning has been telling. Speculators' position in the COMEX futures market which comprises two groups called Managed Money and Other Reportables remains by far the biggest exposure held across the commodities sector, but at 22 million ounces, it remains well below last year's peak at 31 million. The silver net continues to ebb and flow with speculators currently holding 208 million ounces, down from a June peak at 332 million, and not far above the five-year average at 167 million ounces, highlighting a market where positions can be accumulated if and once the technical outlook improves further.
For now, the focus has shifted squarely to U.S. monetary policy and the dollar for signs of a potential trigger for an upside break.
Several developments could provide the spark needed to break the current stalemate: A clearer Fed pivot tone at Jackson Hole or beyond, confirming a September cut and hinting at a more accommodative stance into year-end. That would likely weigh on the dollar and push real yields lower, providing a tailwind for both metals.
Weaker labor data, whether from payrolls or JOLTS, would reinforce easing expectations and support gold as the dollar softens. Especially if the Fed cut rates despite resurging inflation.
Geopolitical risk remains a wild card, with both Ukraine and the Middle East capable of reintroducing a safe-haven premium at short notice.
For silver specifically, stronger-than-expected Chinese policy support or upside surprises in solar installations could highlight the structural deficit and tighten balances further.
For the coming weeks, attention will center on: Powell's Jackson Hole remarks and subsequent Fedspeak, which may set the tone for September.
The dollar index, which recently has gone through a period of consolidation, strengthening a bit before once again showing signs of coming under pressure, with any reversal lower potentially acting as a release valve for gold and silver.
S. Treasury real yields, especially the 10-year, as a directional anchor.
ETF flows and speculative positioning data, which can highlight changes in conviction.
Chinese activity data and stimulus signals, given silver's strong industrial linkages.
Conclusion
Gold and silver remain boxed in, waiting for a catalyst. Beneath the surface, both markets retain a supportive foundation of flows and structural demand, with central banks and industrial users continuing to absorb supply. The next move higher will likely require a macro trigger—most obviously a dovish Fed signal, weaker U.S. data, or a geopolitical shock. Until then, the metals look set to remain range-bound, with traders left waiting for volatility to return.