Gold and silver extend the rally, but volatility concerns remain

Gold and silver prices extended their gains on Wednesday, with analysts saying further gains will be determined by the direction of currency and interest rate expectations.

Spot gold It was up 2.4% at $5,054.6 an ounce as of 5:37 a.m. ET, while gold futures increased by about 3.4% and reached 5.1 dollars. At the same time tarnished silver 90 dollars per ounce by 5.8%. Silver futures increased by 8% and made 90.16 dollars.

Precious metals prices rallied after gold fell by around 10% and 30% on Friday. to fall in silver prices, marking the metal’s worst one-day performance since 1980.

“Today’s rebound in gold reflects renewed bearish buying after one of the sharpest corrections in precious metals as broader markets stabilized and the US dollar softened,” Eva Manti, commodities strategist at ING, told CNBC in an email.

The ICE US Dollar Index It was little changed on Wednesday at 97.382, but down sharply from 99.39 on January 19.

London-listed mining companies also extended gains. Rio Tinto increased by 1% and Anglo American was trading 0.7% higher, but Antofagasta decreased by about 0.2%. The FTSE 350 Precious Metals & Mining Total Return Index increased by 2% to about 34,963.

UBS CEO Sergio Ermotti said the bank’s customers have been cautious lately.

“They’re looking for protection, they’ve been shying away from the tech sector a little bit lately.” Ermotti said this in an interview with CNBC.

“Thus, I think it’s fair to say that excess cash has probably been redeployed in capital markets. We’ve seen that in precious metals over the last couple of months, but overall, clients are sticking to their asset allocation,” he added.

According to analysts, further growth in precious metals is likely to be much smaller.

“While volatility is likely to persist in the near term, we view this move as a position-based recovery rather than a structural reversal,” ING’s Manti said.

“The pace and stability of any other gains in the coming weeks will be shaped by dollar movements, interest rate expectations and risk sentiment, with precious metals likely to rise at a steady pace rather than repeat the explosion of the past three months,” Manthey added.

Goldman Sachs pegs the price of gold at $5,400 by the end of 2026.

“Our forecast includes two drivers: central banks will maintain their recent pace of accumulation and private investors will step up purchases of gold ETFs as the Fed cuts rates,” Goldman analysts Lina Thomas and Daan Struiven said in a research note.

Meanwhile, BofA Securities is targeting gold above $6,000 in the coming months.

“Physical market fundamentals are somewhat shaky but still supportive. That said, we are concerned about the recent pace of price increases and the accompanying increase in volatility,” BofA’s global commodities research team said in a note.

Their forecast is political uncertainty ahead of this year’s midterm elections in November and the direction of US interest rates under President Donald Trump’s Federal Reserve chairman nominee Kevin Warsh.

“While Warsh’s impact on precious metals is not yet entirely clear, the correction may not necessarily be driven by a view of where rates are headed — ultimately, Warsh seems to be pushing for further easing — but by optimism that the Fed will be less data-driven, forward-looking and pragmatic.