Precious metals go through prolonged consolidation phase Precious metals go through prolonged consolidation phase Precious metals go through prolonged consolidation phase

Precious metals go through prolonged consolidation phase

Ole Hansen

Head of Commodity Strategy

Key points

  • Precious metals undergoing an extended period of consolidation, giving traders and investors time to adapt to higher levels.
  • China, a major driver of gold buying since 2022, has temporarily stepped aside, thereby removing an otherwise constant source of demand.
  • Hedge funds getting onboard early and at lower levels helps explain why gold has suffered a smaller correction than silver.
  • We maintain our "Year of the metal" theme with clarity about the timing and depth of incoming US rate cuts needed for additional support.

The precious metals sector is undergoing an extended period of consolidation, and following the strong run up earlier this year, this phase gives traders and investors time to catch their breath while adapting to new and higher levels. Following two unsuccessful attempts to establish support above USD 2400, gold has, since early April, seen most of its daily closes being within a USD 2280 to USD 2380 range. The biggest setback during this time was when data showed the People’s Bank of China, after 18 months of non-stop buying, paused their purchases in May.

China, a major driver of the gold rally since 2022, is in our opinion nowhere near done buying gold, and we believe the pause is mostly driven by the bank balking at the prospect of paying record prices. Also, the recent attention paid to Chinese private buying, another significant driver of demand for physical gold, has likely thrust them into a spotlight they normally avoid. Overall, gold is still consolidating, and the news will likely prolong that phase, but overall, the long-term bullish outlook has not changed.

We maintain our positive outlook for investment metals with the below drivers still the focus:

  • Geopolitical risks and events remain a key feature, although the price supportive impact so far has mostly been of a short-term nature

  • Strong retail demand in China amid the desire to park money in a sector seen as relatively immune to a struggling economy and property woes

  • Continued central bank demand amid geopolitical uncertainty and de-dollarisation, and not least gold’s ability to offer a level of security and stability that other assets may not provide. China’s buying pause is seen as temporary 

  • Rising debt-to-GDP ratios among major economies, not least in the US, raising some concerns about the quality of debt. In other words, rising Treasury yields are not necessarily negative for gold as they raise the focus on overall debt levels and the sustainability of those.

  • In addition, the focus is changing from the negative impact of lower rate cut expectations towards support from a sticky inflation outlook.


Gold has, throughout the latest and once again shallow consolidation phase, managed to hold above technical levels, currently around USD 2280, which otherwise could have triggered long liquidation from managed money accounts, currently holding an elevated speculative long in the futures market, mostly entered at even lower levels below USD 2200

Besides the mentioned strong demand from central banks and retail investors in China, it is clear that the bulk of the run up in prices back in February and March was supported by strong demand from managed money traders, such as hedge funds. Having joined the rally at an early stage, they have subsequently not been forced to adjust (sell) positions as the current correction phase, has kept prices above levels that otherwise would have forced them to reduce their exposure.

Getting onboard early and at much lower levels helps explain why the current gold volatility is relatively low compared with other metals such as silver, platinum and copper where speculators joined a bit later, and at higher prices, leaving them more exposed to long liquidation and with that the risk of a deeper correction. Gold and silver continue to see limited interest from ETF investors who have remained mostly net sellers since 2022 when the FOMC began its aggressive rate hiking campaign, in doing so raising the cost of carry, or opportunity cost, of holding a non-coupon paying metal investment. Demand from ETF investors will likely remain subdued until interest rates are lowered, and this cost is being reduced.

Source: Saxo

Silver’s aggressive 25% rally last month continues to deflate, once again highlighting that wherever gold goes, silver goes, but faster. Still up by more than 22% year-to-date, the semi-industrial metal benefitted from the recent strong rally across industrial metals, not least copper with which silver shares some green transformation credentials. However, the copper rally became unstuck once the market realised current fundamentals, especially in China, pointed to weakness, not strength, and the subsequent correction has so far resulted in losses this month of around 3% for both silver and copper.

As mentioned above, managed money accounts or speculators were relatively late to the rally in both metals, and the need to reduce exposure, in some cases on loss-making positions, has driven both silver and copper sharply lower, with both surrendering around half the gains seen during May. The higher price volatility in silver compared with gold helped drive the gold-silver ratio from an 88 high to an August 2021 low at 72.70 last month before the mentioned silver slump helped drive it back up to the current level around79 ounces of silver to one ounce of gold.

Source: Saxo

While we maintain our “Year of the metals” theme, highlighted in our Q1 outlook, we believe the strength of the rally seen already this year with gold trading up 12%, and silver by 23%, could see an extended period of consolidation while investors and traders adjust to higher levels and while we await clarity about the number of and timing of incoming rate cuts.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article


The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.