(Kitco News) - Volatility in gold and silver has calmed, with prices settling slightly above $5,000 and $80 an ounce, respectively; however, one financial institution warns investors to expect further price swings in the coming months as the market continues to consolidate.
In its latest quarterly outlook, commodity analysts at Sucden Financial said they expect gold prices to continue trading around $5,000 an ounce through the first quarter as the market balances its role as both a momentum trade and a safe-haven asset.
The analysts said that despite the new speculative momentum, persistent geopolitical tensions, combined with deep uncertainty around U.S. monetary policy and threats to its political independence, have shifted gold’s role to become an expression of macro distrust rather than its traditional function as a hedge against inflation.
“This shift has elevated gold’s strategic appeal, even as near-term price action remains heavily influenced by speculative flows and volatility rather than incremental macro data,” the analysts said. “Gradual de-dollarisation provides an anchor of confidence, while balance-sheet expansion and supportive credit conditions increasingly amplify price moves, with credit rather than cash now doing more of the work.”
Although gold prices could see further downside pressure as speculative investors take profits and adjust to slowing volatility, the analysts said robust investment demand will keep corrections short and shallow during the expected consolidation period.
“The broader macro and institutional backdrop remains supportive, with geopolitical risk, policy credibility concerns and accommodative financial conditions limiting the risk of a sustained reversal,” they said. “A healthier recovery is likely to be gradual and less momentum-driven, with prices gravitating around the $5,000 area rather than making a rapid return to recent highs, and pullbacks serving to reset positioning rather than signal a fundamental trend change.”
While the gold market is expected to find some equilibrium, Sucden expects to see more instability in the silver market. The firm sees the precious metal trading within a fairly wide range, with support at $70 an ounce and resistance at $100 an ounce.
“Silver remains prone to sharp extensions as well as abrupt corrections, particularly in an environment where elevated prices discourage producer hedging and amplify the role of investment demand,” the analysts said. “Looking ahead, silver continues to benefit from the same macro backdrop supporting gold, including geopolitical uncertainty, US political risk, and broader de-dollarisation themes. However, its higher beta and sensitivity to flows leave price action less stable.”
As for what could spark the next rally in precious metals, they said a potential recession in the U.S. could trigger new safe-haven flows into hard assets. Although the U.S. economy has remained fairly resilient, the analysts at Sucden are not convinced.
“We believe the economy is under more pressure than markets are currently pricing in, with two key risks that could shift the narrative toward a more dovish, pessimistic stance. Namely, potential mini-AI bubble bursts and US labour market weakness sparking recession-like fears across broader markets, even if those concerns ultimately prove unfounded,” the analysts said.
So far, the U.S. economy has remained fairly resilient, with the labor market relatively healthy. On Wednesday, the Labor Department said that 130,000 jobs were created in January. Employment gains beat expectations, as consensus forecasts had called for job growth of 66,000.
While January’s headline data was better than expected, economists note that it showed a slowing trend through 2025. Sucden said there is a risk that unemployment could reach recession-signalling levels if current patterns continue.
“A key market focus is the Sahm rule, which signals recession if the three-month average unemployment rate rises by 0.5 percentage points above its 12-month low,” the analysts said. “As of January, the indicator is at 0.35, so there is still some cause for concern. Should the Sahm rule threshold be crossed, it could spark recession fears, market volatility, and increased demand for safe-haven assets, even in the absence of a GDP contraction.”
