(Kitco News) – Precious metals investors are in for more extreme swings before the price action stabilizes, while the scaling back of Fed rate cut expectations is another medium-term headwind for gold and silver price gains, according to precious metals analysts at Heraeus.
In their latest update, the analysts noted that even as the Iran conflict drags on, gold still isn’t catching a bid.
“Geopolitics and the war in the Middle East are dominating the news, but the gold price continues its retreat from its extremely overbought level of late January,” they wrote. “Some perspective may be needed on the recent sell-off. The gold price was $2,625/oz at the start of 2025 and $4,319/oz at the start of 2026 for a 65% gain, which is considerable for what is normally a low-volatility, safe-haven asset. The daily RSI reached 93 at the end of January, which indicated that gold was extremely overbought, so a period of consolidation was inevitable.”
The analysts also revisited the interest rate environment and its potential impact on the yellow metal’s price prospects following last week’s Fed meeting.
“The US Federal Reserve held interest rates at its meeting last week,” they wrote. “This was as expected and the committee members’ projections for rates still indicate the chance of a cut later this year. During discussions, some members of the committee suggested that a rate increase might be appropriate. The Fed and inflation have an unfortunate recent history, so one might expect a little more attention to be paid this time around. However, there has been quite a shift in the market’s view of the future for US interest rates in the last week, with no change this year now having the highest odds, followed by one rate cut, with significantly lower odds of more than one cut.”
“Perhaps the market view is that if the eventual impact of higher energy prices is slower GDP growth, that would make monetary easing more likely,” they added.
Gold sild all the way down to $4,099.12 in early morning trading, but has since recovered to trade back above $4,400 per ounce shortly after the North American equity open.
Spot gold last traded at $4,416.35 per ounce for a loss of 1.80% on the session.
Turning to silver, Heraeus analysts cited the recent BIS report on the magnifying impact of retail traders during the precious metals price rout of late January.
“Retail investor behaviour exacerbated the rally and sell-off in silver and gold, according to an analysis published by the Bank for International Settlements (BIS),” they said. “The strong silver and gold price rallies and their subsequent sharp declines point to retail flows, and the amplifying effects of forced sales by leveraged ETFs, trend-following investors, such as commodity trading advisors, and margin dynamics. Retail investors were the main source of inflows into silver and gold ETFs in the months before the prices peaked, whereas institutional investors reduced their exposure.”
“Investors now have to contend with much more volatility than usual in silver and gold and it may take some time for price expectations to be reset,” they warned. “The silver price fell sharply last week, with buying support coming in under $70/oz. If that support gives way, the next region of support could be $45- $55/oz.”
Silver prices have traded in a wide range between $61 and 69.725 per ounce on Monday morning, and are hovering near flat in the early going of the North American session.
Spot silver last traded at $67.811 per ounce for a loss of 0.15% on the daily chart.
