Zheshang Bank FICC · Precious Metals In-depth Report: Geopolitical Tensions Eased, Gold and Silver Recover Again—May Market Outlook

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　　Source: Zheshang Bank FICC

　　Authors: Cai Ruiyi, Wu Jiaxi

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　April saw precious metal ETF flows improve compared to March, but strong inflows have not yet resumed overall.

　　For gold, domestic gold ETFs’ total holdings rose marginally by 0.31% MoM, continuing positive growth, but at a slower pace than March’s 2.96%, showing domestic allocation demand remains but momentum for chasing highs or bottom-fishing has weakened. Overseas gold ETF holdings dropped 1.10% MoM, a notable narrowing from March’s -4.91%, indicating selling pressure in overseas markets has eased.

　　For silver, overseas silver ETF holdings declined 1.37% MoM in April, also a marked improvement from March’s -4.49%. With silver prices stuck in a high-volatility zone, slower ETF outflows indicate earlier panic selling is easing, but sustained inflows have not reappeared.

　　

　　

　　

　　April precious metal volatility fell sharply from March, showing panic from the selloff is abating. Gold’s 10-day rolling annualized vol trended downward from March’s highs, ending near 20%; silver’s vol also compressed but remained between 35%–45%, still much higher than gold.

　　For implied volatility, the Gold Volatility Index (GVZ) trended down throughout April, ending near 25–30; Silver Volatility Index (VXSLV) also steadily dropped to around 50, significantly off its Q1 highs.

　　

　　

　　

　　For gold, April’s domestic/overseas price spread mostly stayed in the 0–5 CNY/gram range. It dipped mid-month but then recovered, ending near 3 CNY/gram. By contrast, gold’s spread was more stable than silver’s, indicating stronger onshore/offshore price linkage and no significant market mispricing.

　　At the start of April, silver’s spread was 1,900–2,100 CNY/kg, widened quickly mid-month to 2,300–2,400 CNY/kg, narrowed again late in the month, but then rebounded above 2,200 CNY/kg. In summary, silver’s spread “widened mid-month, narrowed late, and recovered by month’s end,” indicating robust domestic market support amid volatile international silver, but still with unstable spreads.

　　

　　Gold Onshore/Offshore Spread Trend

　　Silver Onshore/Offshore Spread Trend

　　

　　

　　Asset performances in April 2026 showed a clear recovery in global risk appetite. The Nasdaq rose 15.29% MoM, S&P 500 gained 10.42%, with equities rebounding strongly; at the same time, the U.S. 10-year Treasury yield rose 2.33%, reflecting improved economic outlook and pricing for risk assets.

　　Meanwhile, the VIX index retreated sharply from the March high, dropping from above 25 to the 17–19 range, signaling a quick cooling of market panic and narrowing risk premium.

　　

　　Key Asset Returns

　　

　　

　　

　　

　　

　　In summary, April’s commodity ratios signal: energy shocks marginally eased, risk appetite recovered, and the precious metals focus shifted from gold defense to silver elasticity recovery.

　　

　　

　　

　　

　　In April, the U.S. yield curve recovery trend from March continued, and stayed above zero, showing weak prospects for sharp short-end rate drops, with rate cut trades not returning to the main theme. Correspondingly, while international gold rebounded a bit in April, it has not returned to its previous one-sided uptrend.

　　This suggests April’s precious metals are still primarily constrained by Fed policy expectations. While easing oil and geopolitical risk mitigated reflationary pressure, the U.S. economy and jobs remain resilient, making the market slow to price in earlier rate cuts. The return to a positive yield curve weakens the earlier gold-bullish theme of inversion and loose policy bets.

　　If May brings continued inflation drop and weaker labor data, gold’s recovery room opens; if data remain strong, gold remains capped by the interest rate channel.

　　

　　

　　Both Chinese and U.S. manufacturing PMIs stayed above expansion threshold. U.S. stayed at 52.7, still in expansion, with demand and output not yet noticeably weakening; China dipped slightly to 50.3 but remained in expansion, supporting mild recovery in domestic industry.

　　For precious metals, resilient U.S. manufacturing delays rate-cut pricing, capping gold; stable China PMI at >50 offers marginal support for silver’s industrial angle.

　　

　　

　　

　　

　　

　　In April, the dollar index first rose then fell, failing to extend March’s one-way rally. The 12-month SOFR rate also dropped after previous gains, showing the market’s pricing for “higher for longer” rates is losing some steam.

　　For precious metals, synchronized retreat in the dollar and SOFR means valuation pressure eased. A weaker dollar reduces pricing pressure for gold and silver; lower short rates make holding zero-yield assets less costly—supporting recovery in gold and silver.

　　In summary, April’s dollar and rates were notably less suppressive than March. If May’s U.S. inflation and jobs data keep cooling, the dollar and SOFR retain room to fall, strengthening the case for gold’s rebound; if data reheat, a dollar rally could again cap precious metals.

　　

　　

　　In April 2026, global gold reserves rose to 36,615.81 tonnes, up about 0.22% MoM from 36,535.39 tonnes in March, with official sector demand still strong. May data climbed further to 36,660.84 tonnes, showing the central bank gold-buying trend is unbroken by price volatility at high levels.

　　As for reserve ratios, in April, global gold as a percentage of forex reserves rose to 30.08%, China’s to 9.98%, both much higher than in March. In May, global gold share dropped back to 27.50%, China’s to 9.14%, but both remain well above a year ago levels.

　　

　　

　　

　　

　　Gold in April broadly showed a “low oscillation—rebound recovery—pullback confirmation” pattern. It didn’t extend March’s downtrend, but repeatedly moved sideways in the $4,500–$4,800/oz range. Late April into early May, gold fell to a one-month low, then rebounded on a weak dollar, oil price drop, and warming peace expectations between U.S. and Iran. Reuters’ May 7 report showed spot gold rising to $4,733.59/oz, reflecting market trade of lower inflation pressure and revived rate-cut expectations due to easing geopolitical risks.

　　Technically, gold is in the repair phase after March’s sharp drop. The short-term rebound improved but hasn't yet broken through the intense resistance above. In general, gold is out of the most extreme “spiking-vol-drop” stage, but still needs to break key resistance for a move from “weak recovery” to “trend recovery.”

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　Silver outperformed gold in April, showing greater elasticity. Early May saw silver’s surge accelerate alongside a gold rebound and improved risk appetite. Reuters reported on May 7 that silver rose to $80.82/oz, with a short-term rebound outperforming gold.

　　Technically, silver shifted from weak post-crash repair in March to active rebound now. Keep in mind, silver dropped further earlier, and its volatility is still high—so the current rally remains high-elasticity but isn’t yet a solid reversal.

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　

　　After a March selloff triggered by energy shock, renewed inflation, and delayed rate cut expectations, precious metals entered into a volatility-cooling recovery in April. By early May, real progress in U.S.-Iran talks has shifted market focus from “energy shock—inflation risk—rate cap” to “geopolitics cooling—oil price dropping—rate-cut optimism.” The consecutive surge in gold and silver suggests the market is now pricing not just safe-haven demand, but the possibility of the Federal Reserve changing course as inflation fears subside.

　　

　　Macroeconomically, the recent precious metals rally is not driven by classic “war hedge buying,” but by transmission from U.S.-Iran easing: less conflict means lower oil, lower oil softens energy-driven inflation, and lower inflation puts Fed rate cuts back on the table. In this context, gold benefits from a weaker dollar and lower real rates, while silver gets a further boost from improved risk appetite and revived industrial demand—hence the sharper short-term elasticity.

　　Concurrently, central bank gold buying continues globally, with China’s central bank in April increasing gold reserves for an 18th straight month. This demonstrates that gold’s long-term allocation logic remains unchanged despite short-term price turmoil. In the short run, prices are mainly swayed by the U.S.-Iran situation, oil and Fed outlook; but long-run support comes from official buying, reserves, and the global de-dollarization trend.

　　

　　

　　

　　

　　

　　

　　

　　

• Gold:
  Gold has recaptured
  $4,700/oz
  recently, with a technical structure much improved over April. If it can hold
  $4,650–$4,700/oz
  , it is set to repair toward the
  $4,800–$4,900/oz
  resistance area; breaking out above
  $5,000/oz
  would show a switch from weak to trend recovery. If talks reverse or U.S. data turn strong, gold could slip back to
  $4,600/oz
  support.

• Silver:
  Silver’s short-term elasticity clearly exceeds gold, with a shift from weak repair to active catch-up. If silver holds above
  $78–$80/oz
  , it could challenge the
  $82–$85/oz
  resistance area; if it sits tight there, the next target would be
  $90/oz
  . However, silver’s rally is shaped by risk-on recovery and short squeezes—if sentiment turns, its pullbacks will be faster than gold’s.

　　

• Gold:
  Stick to “mid/long-term base + add on confirmed breakout.” At present, focus on the
  $4,650–$4,700/oz
  support; if price holds, keep a recovery trade; if
  $4,850–$4,900/oz
  is broken, can chase with moderate trend following; if
  $5,000/oz
  rally fails, beware of quick profit-taking by short-term bulls.

• Silver:
  Maintain “trend following, strict pullback control.” Silver is more elastic (but more volatile) than gold. If price stands above
  $80/oz
  , watch for a move toward
  $82–$85/oz
  ; if that zone can’t be broken, consider partial profit-taking. If it falls back below
  $75/oz
  , it signals a clear drop-off in repair momentum.

　　

　　

　　The current U.S.-Iran détente is still at a temporary deal stage, with no solution yet for the core nuclear, Strait of Hormuz, and security disputes. Failure or escalation could quickly inflate oil risk premium, and precious metals will again face reflation and higher-rate headwinds.

　　

　　If later U.S. inflation or labor data remain solid, the Fed’s rate-cut prospects could be delayed again, with a dollar and short rates rally capping gold and silver.

　　

　　Recent gold/silver gains have been rapid, especially silver, often event-driven and fueled by short covering. If positive headlines are digested, expect “buy rumor, sell fact” corrections.

　　

　　Silver’s outperformance includes higher volatility and sensitivity to capital flows. If it can't secure the $82–$85/oz resistance, a slide to $75–$80/oz is likely.

Editor: Zhu Henan