(Kitco News) – Now that gold and silver have broken near-term critical support, the precious metals may be in for a longer and deeper correction lasting into 2027 before the tide turns, according to Daniel Pavilonis, senior commodities broker at StoneX Group.
Pavilonis told Kitco News that he thinks gold will need some indication of easing monetary policy to resume the upward trajectory of the last couple of years.
“We're still seeing some inflation,” he said. “We're seeing equities sell off. We're seeing commodities have come off, except for some of the energy sector.
Pavilonis said the market is in the midst of an unwind. “If you're looking at the charts, they don't look so hot... If you're just looking at this from a technical standpoint, not any fundamentals, it looks like we could go lower.”
As for how low the precious metals could slide, Pavilonis said the metals could be in for a deep pullback before sustained buying resumes.
“I could see silver getting as low as the high $30s,” he said. “I could see gold getting as low as somewhere around $3,000. I think it's very likely to happen into the first quarter of next year, and then maybe just base out for a little while, and then possibly move higher.”
Pavilonis said he’s seen this time and time again. “What happened the last few times when silver hit $50, when gold spikes up? We sell off afterward,” he said. “The party is over. The themes that we [saw at the early 2026 highs], the same headlines, the same stories… because of inflation, because of this or that. People need to rationalize why it went up so much. But if you go back into the archives and look at news around 1980 – before people realized it was the Hunt brothers, which was part of the story – but it was the same thing: ‘We're running out of silver, we're running out of gold, the exchanges are low, warehouses are low, inventories… And people are buying, and so you’ve got to go out and buy some gold, go out and buy some silver!’ There were almost identical New York Times articles being written about silver and gold in the run-up to 1980.”
“Now I think that anybody from the move to the upside that hasn't been stopped out, or is holding on the physical side, It's time to hedge,” he said. “You want to start collaring around positions. You want to start collaring and capitalizing on it. Because if it does go lower, then there's ways to mitigate that, put yourself in the right position where you can accumulate more. That's what I would be thinking about right now.”
Pavilonis said that if we see further liquidations across financial markets, he expects to see more selling of gold as well.
“We have this rationale to buy and hold onto the metals,” he said. “I think in the long term you're going to be right. But in the short term, the thesis can be wrong, so it's time to maybe even hedge a little bit further if you haven't already.”
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