(Kitco News) - Gold prices are seeing volatility on Thursday as traders prepared for a test of the $4,000 per ounce support level, while silver traders are gearing up for their own critical battle to defend $60, according to Christopher Lewis, market analyst at FX Empire.
“The gold market gapped lower, tried to rally, and then gave back gains as we continue to see a lot of noise coming out of the headlines, and of course, it has moved the bond markets,” Lewis noted on Thursday. “But what I find interesting, and this is really interesting to me, is that suddenly the negative correlation between rates and gold seems to be breaking down. For a long time, we’ve seen higher interest rates and lower gold prices. But now, we’re starting to see gold fall over the last couple of days as rates are dropping.”
Lewis said $4,000 is the next area that market participants are watching, and he expects the yellow metal to get a measure of psychological support from it. “Quite frankly, when you look at the longer-term trend, you could make a real argument for a return to $3,500,” he cautioned. “And still, you’d be talking about yet a minor pullback, as it were, in the longer-term trend.”
Lewis wrote that he expects prices to remain stuck at these lower levels for a while longer, but he still holds the view that gold will appreciate over the longer term. “That recent melt-up that we had seen in 2025, I think, is a little bit of a harbinger of what probably comes down the road,” he said. “But as things stand right now, everybody needs US dollars. And as long as that’s going to be the problem for most traders, then I think you are going to have to be somewhat ambivalent on gold.”
“If we break below the $4,000 level, I think another $500 drop makes sense,” he added. “If we bounce from here, that’s fine, maybe it’s a short-term bounce play that you can initiate, but I would not expect a complete turnaround without some type of external headline.”
Gold is continuing to hold above key support on Thursday, and prices have turned positive on the session, with spot gold last trading at $4,089.45 per ounce for a gain of 0.43% on the daily chart.
Turning to silver, Lewis said the dynamic is similar to that of gold, as traders prepare to defend critical support at $60 per ounce.
“Silver initially plunged during the trading session on Thursday, but we have seen a turnaround, and it does look like we are going to see a bit of a bounce back,” he wrote. “And it does make sense because the $60 level has been crucial for some time. Bouncing from here opens up the possibility of a move to the 200-day EMA and a resistance barrier.”
Lewis expects that the silver market will continue to be beholden to interest rates as well as Iran-U.S. headlines, and he advised caution.
“I think you have to be very careful with your position sizing. It does look a little oversold, so I think maybe a little bit of a bounce over the next couple of days makes some sense,” he said. “But if we give up the $60 level to the downside, that would be catastrophic. That probably opens up $50. I begin to question now whether or not we are in the midst of trying to expand the range, possibly down to the $60 level, with the $90 level above being the ceiling.”
Lewis wrote that “the demand for silver is much higher than the supply” which he believes “opens up the possibility of value” at these levels, but he warned that “this will all come down to risk appetite and interest rates.”
Silver is also seeing some renewed buying on Thursday, with spot silver last trading at $64.147 per ounce for a gain of 1.13% on the session.
