From gold breakdown to silver plunge, have institutional expectations changed?

function ft_articletoptg_scrollto(){ let ft_tg_el = document.getElementById('app-qihuo-kaihu-qr'); if(ft_tg_el){ let ft_tg_el_offtop = ft_tg_el.offsetTop - 100; window.scrollTo({ top: ft_tg_el_offtop, behavior: 'smooth' }); } }

　　

　　On May 18, international gold prices continued their downward trend from last week, with spot gold once dropping below the key psychological threshold of $4500 per ounce, reaching as low as $4480.01, the first time since late March.

　　Market analysts believe the core reason behind this round of gold declines is the resonance of “heavy macro tightening expectations” with a “cliff drop” in physical buying.

　　Specifically, US inflation surpassing expectations has strengthened the outlook for interest rate hikes. Data shows that the US Consumer Price Index (CPI) rose 3.8% year-over-year in April, higher than the market expectation of 3.7%, while the April Producer Price Index (PPI) surged 6.0% year-over-year, far exceeding the expected 4.9%. Guosen Futures pointed out that, influenced by the rising probability of rate hikes, the US dollar index increased for four consecutive days, breaking through the 99 mark, and the 10-year US Treasury yield soared by nearly 14 basis points to 4.596%, the biggest single-day increase in a year. Tighter rate expectations put direct pressure on non-interest-bearing assets such as precious metals.

　　

　　

　　Qu Rui, Senior Deputy Director of the Research and Development Department at Dongfang Jincheng, summarized that the continued weakness in gold prices is partly due to the potential escalation of tensions between the US and Iran, which has reignited inflation expectations in global markets and put gold under pressure. On the other hand, the smooth appointment of Walsh as the new Fed Chair, coupled with higher-than-expected US inflation in April, has led the market to worry that there may be significant changes at the June FOMC meeting, with expectations for rate cuts dropping and thus unsettling gold prices.

　　

　　Xia Yingying, head of the precious metals research group at Nanhua Futures, told Interface News that this round of silver’s slump was triggered by a combination of reassessment of macro expectations, repeated Middle East geopolitical situations, and silver’s technical breakdown.

　　

　　

　　Several institutions believe that against the backdrop of heightened expectations for Fed rate hikes, gold and silver prices will remain under pressure in the short term, but the medium and long term remain optimistic.

　　JP Morgan has lowered its 2026 average gold price forecast from $5,708 per ounce to $5,243, but still expects gold to rebound to above $6,000 before year-end. For silver, the bank expects the price to bottom in the $75-80 range over the next few quarters, with hopes of rising back to $90 in early 2027.

　　

　　Xia Yingying maintains a core long-term bullish view on gold and silver, but notes that a period of consolidation is still needed in the short term until macroeconomic trajectories become clearer.

　　She believes that regardless of whether the US ultimately enters “stagflation” or “rate cuts,” both pathways point to a higher center of gravity for gold prices. The market is now in a chaotic phase before “choosing one of the two.” “Fed rate hikes remain a low probability event, but as the timing of rate cuts keeps getting pushed back, precious metals still lack a clear trend-driving force.”

　　At the same time, risks to monitor include: if the US core PCE inflation rises further, the market may reprice the risk of “another rate hike,” possibly putting gold at risk of retesting key support levels; a slowdown in central bank gold purchases may reduce demand-side support; and if dollar liquidity tightening triggers systemic deleveraging, gold may temporarily lose its “safe haven” role and fall in tandem with risk assets.

　　Meanwhile, silver’s dual attributes as both an industrial and financial asset mean its volatility naturally exceeds gold’s. Investment-driven demand for silver’s financial attributes brings high volatility, and its price trend is largely synchronized with gold. However, high prices could speed up the development of global photovoltaic “de-silverization” technology, which may constrain further increases in silver prices.

Editor: Qin Yi