Gold and Silver Stage Cautious Rebound, but Analysts Warn Against Sustained Rally

Spot gold and silver prices climbed this week after a prolonged stretch of selling pressure, though analysts from several major banks say the gains reflect opportunistic buying rather than any fundamental shift in the market.

Spot silver traded at $59.47 an ounce as of early Wednesday morning, up approximately 6.3% from $55.90 at the close of the previous week. Spot gold rose roughly 2.4% over the same period to $4,119.04 an ounce.

ING commodities strategists Warren Patterson and Ewa Manthey attributed the week's gains to "bargain hunting after recent weakness" rather than "a material shift in the geopolitical or macroeconomic backdrop," according to a Wednesday note.

Both metals remain significantly below their all-time highs set in late January, when spot gold reached $5,589.38 an ounce and silver peaked at $121.67 an ounce. Higher interest rates, a stronger U.S. dollar, and elevated oil prices tied to the ongoing conflict with Iran have weighed on investor appetite for precious metals since that peak.

"While tensions in the Middle East remain supportive for precious metals, markets are weighing softer US economic data against the inflationary risks from higher energy costs," Patterson and Manthey said.

The ING strategists added that gold is "likely to remain sensitive to developments in energy markets and expectations for US monetary policy," while silver "could continue to outperform if strength in industrial metals persists alongside safe-haven demand." They noted that silver's performance reflects "support from improving sentiment across the industrial metals complex, particularly copper."

Analysts at Bank of America struck a more cautious tone on gold, warning in a July 16 note that the metal recorded its worst quarter in 13 years in the three months ending June. "A death cross signal, elevated net-long positioning and similarities to major peaks raise the risk of a longer, deeper correction," BofA said. A death cross occurs when a short-term moving average — typically calculated over 50 days — falls below a longer-term 200-day moving average, a pattern often interpreted as a bearish signal.

UBS was skeptical of a near-term silver rebound and lowered its target for an attractive entry point this week, reducing it from around $55 an ounce to a range of $48 to $50 an ounce.

"We believe near-term headwinds for silver are likely to persist as escalating Middle East tensions, higher opportunity costs, and a firm US dollar continue to weigh on investor sentiment," UBS Strategist Dominic Schnider wrote in a July 20 note. "Silver faces a top-down backdrop that offers investors little impetus to increase long positions. With investment demand patchy, silver prices have yet to find a solid floor."

Not all voices in the industry share that pessimism. Diane Garrett, executive chair and CEO of Hycroft Mining, told CNBC's "Squawk Box Europe" on Tuesday that recent price deterioration amounts to a "normal correction," and described the broader trend as "not a broken bull market."

Garrett cited 17 consecutive months of central bank gold buying as a key demand signal, while pointing to silver's dual role as both a monetary and industrial metal. "It's feeding the AI revolution and the supercomputers — all of that that you have to have silver for, and there's no substitute," she said.

With the Iran conflict still unresolved and U.S. monetary policy remaining a central variable, the near-term trajectory for both metals will likely hinge on whether incoming economic data shifts expectations for Federal Reserve rate cuts — a catalyst that bulls in the precious metals market have been awaiting for months.

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