Gold and silver have given back a chunk of their 2025 gains. Both metals are still up sharply for the year - gold rose 66%, silver surged 135% - but the momentum has reversed. The question is whether the recent slide is a pause or the start of a longer retreat.
Central banks around the world are taking a harder line on inflation. This month, both the Bank of Japan and the European Central Bank raised their benchmark interest rates. The Federal Reserve under new Chair Kevin Warsh is also sounding hawkish.
Higher interest rates tend to boost the U.S. dollar and make non-yielding assets like gold and silver less attractive.
Reduced demand for safe-haven assets has also resulted from the apparent end to the Middle East conflict. Investors are shifting money out of precious metals and into stocks. Macquarie strategists summed it up: "The apparent end to the conflict in the Middle East, combined with a more hawkish Fed, has caused prices to retreat as gold's safe haven appeal fades together with the prospect of higher interest rates and a stronger USD, with a Fed rate hike in Q4 now fully priced in."
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Macquarie's strategists expect gold to stay in a narrow range for the remainder of 2026. They forecast an average spot gold price of $4,641 per ounce for 2026, a 35% year-on-year gain. But they recently trimmed their year-end 2026 forecast to $4,300 from a previous outlook of $4,400.
For silver, Macquarie predicts a price of $70 per ounce in the final quarter of 2026 and $65 an ounce by the end of 2027. The firm said: "As with gold, we expect prices to remain range bound for the remainder of this year before gradually trending lower in 2027, with tensions caused by inflation and the probability of a Fed hike to limit further upside."
The sharp gains of 2025 reflected heightened safe-haven demand amid persistent inflation, geopolitical turmoil, and aggressive central bank purchases of gold. Those tailwinds have now weakened as rate hikes cool demand and conflict risks recede, leaving the metals without a clear catalyst for renewed upside.
Not everyone is bearish. Guy Adami, co-founder of RiskReversal Media and a "Fast Money" trader, thinks a turn is coming.
"I'm still of the belief that inflation is a problem. I think interest rates go higher. I understand the headwinds that the dollar provides, but at some point I think it's all going to sort of flip, and gold is going to be back in favor." He also noted: "I'm still of the belief that central banks will continue to add to their positions, and gold is going to still be in play for the remainder of the year."
Macquarie strategists warned that silver's recent outperformance makes it more vulnerable.
"The higher inflation and bond yields move, the greater the downwards pressure. For silver in particular, bullish investor sentiment fueled by tighter supply, low inventories and strong demand has caused prices to outperform gold, making it more vulnerable to a retracement. And historically silver retraces quickly."
OCBC strategists also advised caution: "Until real yields ease or ETF liquidation slows or hawkish Fed rhetoric unwinds more, rallies may remain vulnerable to fading."
Macquarie says a major macro event would be needed to reignite investor interest in precious metals. Central banks are expected to keep buying gold - a recent World Gold Council survey on central bank gold reserves, released last week, indicated that nearly 90% of those surveyed believe global gold holdings by central banks will rise over the next twelve months. This could provide a floor.
But for now, the path of least resistance is lower. Gold and silver remain in a holding pattern, waiting for a catalyst.