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

Key points: 

• Gold holds near USD 3,350, supported by ETF and central bank demand

• Silver supported by industrial demand and deficit outlook

• Fed rate cut expectations, the dollar and US Treasury yields remain a key focus

• Potential catalysts: Jackson Hole, US economic data, ETF and speculative flows

 

---

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.