Gold and silver suffer heavy losses! Saxo Bank: The worst period may be over, but a rebound still requires two major conditions

　　Source: 24K99

　　As spot gold fell below $4,000 and silver lost the $60 threshold, sentiment in the precious metals market remains under pressure. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that the continued strength of the US dollar and the Federal Reserve’s hawkish stance are still the main factors suppressing gold. However, some bearish factors, such as declining oil prices and cooling rate hike expectations, are gradually easing, and gold’s fundamentals have started to improve. Nonetheless, until outflows from gold ETFs stabilize and the dollar’s upward momentum weakens, the precious metals market will continue to be dominated by capital flows and technical factors.

　　In his latest market analysis, Hansen pointed out that gold and silver have now comprehensively entered a defensive state, with many investors choosing to reduce positions or even exit the market.

　　Data shows that based on total return, gold has fallen by 8.4% so far this year but is still up 18.5% over the past 12 months; silver’s decline is even more significant, falling 19% this year but up 56% over the past year.

　　He believes the recent continued weakness in precious metals prices is mainly due to the sustained strength of the US dollar and markets repricing the Federal Reserve’s monetary policy path.

　　Dollar Hits 13-Month High, Fed’s Hawkish Stance Continues to Pressure

　　Hansen noted that the US dollar index has continued to rise this week and hit a 13-month high on Wednesday.

　　He pointed out that after the Federal Reserve released hawkish signals last week, the market is again betting on the possibility of further monetary policy tightening in the US later this year, which has become a major driver of the dollar’s strength.

　　For precious metals such as gold and silver, which do not yield interest, higher rates mean increased holding costs, and, with already fragile investor confidence, a stronger dollar further exacerbates market sell-off pressure.

　　Below $4,000, Technicals Further Deteriorate

　　Hansen believes that gold breaking below the key $4,000 mark means the market’s technical outlook has further weakened. Currently, international gold prices have corrected about 26% from the historical highs above $5,600 in January this year. Technical breakdowns may prompt more long positions to be closed out.

　　He pointed out that although speculative positions have declined significantly, the strength of the dollar and continued outflows from gold ETFs remain the two main factors suppressing gold prices.

　　Two Major Bearish Factors Are Easing

　　However, Hansen also pointed out that some macro factors that previously drove gold’s continued decline have started to improve.

　　Firstly, the sharp fall in international oil prices has alleviated concerns over persistent inflation and also reduced the necessity for the Federal Reserve to tighten monetary policy further.

　　This shift is reflected in the federal funds futures market; investor expectations for further rate hikes have cooled, and US long-term government bond yields have also recently retreated.

　　In addition, he mentioned that several major Chinese commercial banks have recently tightened individual precious metals trading business, including suspending some agency trading services, freezing new account openings, and significantly increasing margin requirements, in order to limit high-leverage speculative activity from individual investors.

　　Gold’s Rebound Still Awaiting Two Signals

　　Despite the ongoing weakness in gold prices, Hansen believes that the fundamental environment facing gold is not as severe as before.

　　He stated that whether gold can once again attract fund inflows will depend on two factors: first, the stabilization of gold ETF outflows; and second, a weakening of the dollar’s upward momentum.

　　Until these two conditions are met, gold and silver prices will remain largely influenced by position adjustments and technical trading, rather than by fundamentals.

　　However, once ETF selling pressure eases and the dollar’s rally slows, bottom-fishing funds may return to the market, and sentiment in the precious metals market is also likely to improve.

Editor: Zhu Henan