Dip in gold, silver prices could be strategic buying opportunity, analysts say

“Beyond this near-term outlook, however, we continue to expect prices to move higher. In our multi-asset portfolio, we remain overweight gold,” Mr Gill said.

DRIVERS OF THE RALLY

Analysts pointed to several significant factors that have led to gold prices soaring – central bank buying, geopolitical tensions, concerns over global fiscal policy and inflation.

There has been a loss of confidence in traditional fiat currencies that are not backed by a physical commodity, said Mr Vasu Menon, managing director of investment strategy at OCBC.

“Since 2022, emerging markets’ central banks have increased gold purchases to diversify from the USD to lower confiscation risk following Western sanctions on Russia after it invaded Ukraine,” he said. 

Private investor appetite has also intensified, with growing inflows into gold exchange-traded funds suggesting that retail investors have become dominant buyers in the recent surge. 

The broad rally across silver, platinum, and palladium – metals not typically held as central bank reserves – further confirms private sector demand, Mr Menon said. 

Worries about government spending and debt, as well as political pressure on central banks, have also driven gold prices higher, he added.

Beyond gold’s gravitational pull, silver benefits from promising industrial demand fundamentals. The metal is essential for solar panel production and electric vehicle manufacturing, while supply remains constrained.

“The fundamental picture of improving industrial demand and the scope for higher gold prices remains supportive of the outlook for silver given the positive spillover effect,” said Mr Menon.