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Precious metals rebuild as macro tailwinds return, but gold awaits breakout confirmation
Key points:
- Gold remains range-bound, with USD 4,850 acting as key resistance for a breakout.
- Silver rebounds sharply, supported by both macro easing and improved industrial sentiment.
- Lean hedge fund positioning leaves room for renewed buying once the technical and/or fundamental backdrop strengthen
- Lower yields, a softer dollar and rate cut expectations are rebuilding support, allowing investors to return their attention to long-held underlying drivers
Gold has in the last week settled into a wide USD 250 range, currently approaching the upper end with resistance sighted near USD 4,850. The move reflects a gradual stabilisation following last month’s liquidity-driven sell-off, where a combination of rising yields, a stronger dollar and forced deleveraging weighed heavily on prices.
More recently, the macro backdrop has turned incrementally more supportive. Fed funds futures have once again begun to price in rate cuts, while both the US dollar and real yields have drifted lower. This shift has helped gold recover, but not yet enough to deliver a clear directional signal. For now, price action remains contained, with key resistance still located near USD 4,850, the 50% retracement of the 1,500-dollar correction that unfolded between late January until the through on 23 March. A sustained break above this level would likely be required to trigger renewed momentum and systematic buying from trend-following strategies.
Silver has participated in the recovery, climbing back towards USD 80 after bottoming near USD 61 on 23 March. While gold’s rebound has been primarily macro-driven, silver has enjoyed additional support from its industrial linkage. The recent improvement in copper and broader industrial metals, partly driven by reduced growth concerns as geopolitical tensions show tentative signs of easing, has provided an extra tailwind.
That said, from a structural perspective, silver remains in a rebuilding phase. The sharp correction seen during the March liquidity and inflation shock exposed how sensitive the metal is to shifts in both macro conditions and industrial demand expectations. While the rebound is notable, further gains are needed before confidence can be considered fully restored.
Positioning continues to play an important role. Hedge funds have reduced their net long gold futures position to a 25-month low in the latest reporting week to 7 April. The last time positioning was this light, gold traded near USD 2,000/oz, highlighting the scale of the recent reduction in exposure. Profit-taking following a strong multi-month rally, combined with elevated volatility and uncertainty around the Federal Reserve’s next move, contributed to this sharp decline in participation.
From a forward-looking perspective, however, this leaves the market in a less crowded state. Lean positioning reduces the risk of further long liquidation and instead creates scope for renewed buying should the technical outlook improve and macro conditions remain supportive.
As with most markets, developments in the Middle East continue to act as a key macro driver. While heightened tensions initially supported safe-haven demand, the recent stabilisation has shifted the focus. A potential de-escalation could ultimately prove supportive for precious metals if it leads to a weaker dollar and a renewed focus on underlying US fundamentals.
These include persistent concerns around growth and fiscal sustainability, both of which have been exacerbated by the recent conflict. Increased debt issuance alongside higher input costs risks weighing on investment, compressing margins and eroding consumer demand—factors that may, over time, reinforce the case for lower real yields and a more supportive environment for gold.
In the near term, gold remains firmly range-bound, while silver continues its recovery alongside improving industrial sentiment. However, the underlying backdrop has shifted in a more constructive direction. Lower real yields, a softer dollar, renewed rate-cut expectations and very light speculative positioning collectively point towards a market that is rebuilding rather than breaking down.
The absence of a breakout signal for now suggests patience is required. However, the longer this consolidation persists, the greater the likelihood that the eventual move will resolve higher, particularly if macro tailwinds continue to strengthen.
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The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..