Technical indicators signal healthy consolidation after record runs

Gold's technical picture shows a market working off overbought conditions from its April 2025 record high of $3,500. The 14-day RSI retreated to neutral territory around 40-50, while MACD hovers near the signal line indicating consolidation. Critical support sits at the 21-day moving average of $3,351, with secondary support at the 50-day MA of $3,321. A break below these levels could target $3,297 (38.2% Fibonacci retracement), while resistance looms at $3,400 and the psychological $3,500 level.

Silver's technical setup appears more constructive despite recent weakness. Trading well above its 50-day MA at $32.54 and 200-day MA at $31.70, silver maintains its bullish structure after breaking above critical $35.25 resistance. The RSI at 41.07 provides room for upside, though MACD shows some momentum loss. Key resistance targets include $38.34 (161.8% extension) and the round $40.00 level that multiple analysts are eyeing.

The gold-silver ratio's decline from 105 to 93.62 represents a significant shift in relative valuation. Historically, ratios above 80 indicate silver undervaluation, and the current narrowing trend suggests continued silver outperformance. Ancient ratios ranged from 2.5:1 to 15:1, while the modern average sits around 45-50, indicating substantial mean reversion potential favoring silver.

Central banks drive structural demand while ETF flows turn mixed

Central bank gold purchases reached 183 tonnes in Q2 2025, down 39% quarter-over-quarter but still 3% above the 5-year quarterly average. Poland and India led purchases with 19 tonnes each, followed by Turkey (15t), Uzbekistan (7t), Czech Republic (6t), Qatar (4t), and notably Singapore (4t) as the only developed market buyer. JPMorgan projects 900 tonnes of central bank buying for 2025, marking the fourth consecutive year near the 1,000-tonne level.

ETF flows painted a more nuanced picture. After attracting $30 billion and 322 tonnes year-to-date, gold ETFs experienced their first monthly outflows since November 2024, with May seeing -$1.8 billion in redemptions. North America led outflows at -$1.5 billion, while Europe bucked the trend with +$225 million in inflows. Individual fund performance showed GLD experiencing $342 million in single-day redemptions, while IAU saw $617 million in three-month outflows. Silver's SLV expanded by 100 tonnes with a 0.7% net inflow, demonstrating stronger investment demand.

Shanghai Gold Exchange volumes reached near-record levels with Au(T+D) trading 2,062 tonnes in June, while China's onshore gold price commanded a $51/oz premium over London prices—six times the typical import incentive level. COMEX gold trading hit an all-time daily record of 115,000 contracts on June 20th, representing 50-ounce contracts and indicating significant institutional repositioning.

Economic crosscurrents create stagflationary precious metals tailwind

May CPI data showed inflation accelerating to 2.4% year-over-year from 2.3% in April, with core CPI at 2.8%. More concerning, Q1 2025 PCE inflation surged to 3.6% quarterly from 2.4% in Q4 2024, suggesting tariff impacts beginning to materialize. The economy contracted 0.2% in Q1 2025—the first negative quarter since Q1 2022—driven by a 43% import surge as businesses front-ran tariffs and a 4.9 percentage point drag from net trade.

The Dollar Index (DXY) weakened to 98.35, down 7.22% over 12 months, with the gold-dollar correlation strengthening to over 90% on a one-month basis—the highest in years. This dollar weakness provided crucial support for precious metals despite the Fed's hawkish hold. Conference Board's Leading Economic Index triggered a recession signal with its sixth consecutive monthly decline, falling 0.1% to 99.0 in May.

Physical market strength contradicted paper market weakness as premiums remained elevated. London lease rates at 4.5% indicated supply tightness, while China's premium structure suggested robust Eastern demand offsetting Western ETF selling. American Gold Eagles commanded premiums of $147-177 over spot despite high absolute prices, indicating continued retail accumulation.

Geopolitical premium intensifies as Middle East tensions escalate

The week's defining geopolitical event—Israeli airstrikes on Iranian nuclear facilities—sent shockwaves through commodity markets. Gold initially spiked to an 8-week high of $3,434.87 on June 13th before profit-taking set in. Airlines suspended Middle East flights while concerns grew over potential Strait of Hormuz disruptions, through which 20% of global energy flows transit.

Trump administration tariff policies continued reshaping precious metals flows. Over 2,000 tonnes of gold reportedly moved into the US ahead of potential 10-25% import duties on bullion, creating a $12/oz COMEX-London spread versus the typical $3-5. China reduced gold imports 24% to 44.6 tonnes in July as the Shanghai premium collapsed into discount territory, suggesting trade war impacts on traditional demand patterns.

BRICS expansion and de-dollarization trends provided structural support as global dollar reserves fell to 58%, down 17% over 24 years. Central banks' continued diversification away from USD holdings underpins the multi-year bull case for gold as a reserve asset alternative.

Silver supply deficit persists as industrial demand hits records

Silver's fundamental picture remains exceptionally bullish with the market facing its fifth consecutive year of deficit. The 2025 deficit is projected at 149 million ounces, down 19% from 2024 but still historically large. Total supply is forecast to reach 1.05 billion ounces (+3%), including mine production of 844 million ounces at a seven-year high and recycling exceeding 200 million ounces for the first time since 2012.

Industrial demand reached a record 680.5 million ounces in 2024 and continues growing in 2025, driven by solar panels, EVs, electronics, and 5G infrastructure. Solar PV alone consumed 193.5 million ounces in recent data, up 64% from 2022. Investment demand of 70-73 million ounces could exceed 100 million ounces if current momentum continues, though jewelry demand faces headwinds from elevated prices.

Gold supply dynamics show Q1 2025 mine production at a record quarterly level of 856 tonnes, with annual growth around 1.5% to 88.6 million ounces. Total 2024 supply hit a record 4,974 tonnes, with recycling up 10% due to attractive prices. Demand remains robust with Q1 bar and coin demand at 325 tonnes, 15% above the 5-year average, led by Chinese retail investors who purchased 124 tonnes (up 12% year-over-year).

Major banks target $3,700+ gold and $35-40 silver for year-end

Institutional forecasts overwhelmingly favor continued precious metals gains. JPMorgan projects gold averaging $3,675/oz in Q4 2025 before exceeding $4,000/oz by Q2 2026, with an extreme scenario of $6,000/oz by 2029 if foreign asset reallocation accelerates. Goldman Sachs raised their year-end target to $3,700/oz from $3,300, citing central bank demand adding 9% to prices with $4,500/oz possible in extreme scenarios.

Bank of America sees a path to $4,000/oz gold driven by fiscal concerns and dollar weakness. More conservative forecasts from UBS target $2,900/oz average for 2025 with $3,200/oz peak potential, while Wells Fargo projects a $2,800-2,900/oz range. The LBMA survey average sits at $2,917/oz, though most recent forecasts trend higher.

Silver forecasts cluster in the $35-40/oz range with JPMorgan targeting $39/oz by year-end and noting a "catch-up window" in H2 2025. UBS projects $36-38/oz, MKS Pamp sees $36.50/oz average (+23%), while Bank of America and Saxo Bank both target $40/oz. ING remains an outlier at $29.50/oz, though consensus clearly favors continued gains.

Trading volumes surge as market sentiment remains constructive

COMEX gold trading volumes reached extraordinary levels with June 20th recording an all-time high of 115,000 contracts (50 ounces each), up from 61,000 the previous day. Daily gold trading averaged 27 million ounces—30 times SPDR Gold ETF volume. Global gold markets averaged $266 billion daily in March 2025, with LBMA OTC averaging $136 billion daily in June.

COT positioning data shows non-commercial long positions elevated but within normal ranges after reaching new highs in 2024. The gold-silver ratio compression from 105 to 93.62 indicates improving silver sentiment, while backwardation in futures markets suggests physical tightness. Options activity increased for short-dated contracts as traders position for volatility around Fed decisions and geopolitical events.

Market sentiment indicators paint a constructive picture despite recent consolidation. Combined bar, coin, and ETF holdings total approximately 49,400 tonnes, with private investors holding 45,400 tonnes in physical form. Investment demand reached a 4-year high of 1,180 tonnes in 2024, setting the stage for continued accumulation in 2025.

Dollar correlation strengthens as Fed maintains hawkish patience

The Dollar Index's decline to 98.35 and its strengthening negative correlation with gold (over 90% on a one-month basis) provided crucial support for precious metals. European and Japanese central bank policies created relative USD weakness despite the Fed's hawkish hold. The currency dynamics suggest precious metals may have found a floor near current levels absent a significant dollar rally.

Fed projections for two rate cuts in 2025 remain intact, though uncertainty increased with inflation forecasts raised to 3.0% from 2.7% and growth forecasts lowered to 1.4% from 1.7%. This stagflationary combination—slowing growth with sticky inflation—historically favors precious metals as both inflation hedges and safe-haven assets. Markets continue pricing approximately 100% probability of two cuts by year-end despite Powell's cautious tone.

The Q1 GDP contraction of 0.2% marked the first negative quarter in three years, driven by massive import front-running ahead of tariffs. With consensus expecting just 1.4% real GDP growth for 2025 and Q4 growth approaching "stall speed" at 0.6% year-over-year, recession risks are rising. The Conference Board's LEI triggering its recession signal adds weight to precious metals' safe-haven appeal.

Physical premiums reveal underlying market strength

Despite paper market consolidation, physical premiums remained stubbornly elevated. American Gold Eagles commanded $147-177 over spot while Silver Eagles maintained $7-9 premiums. China's willingness to pay up to $39/oz premiums for gold and London lease rates at 4.5% indicate genuine supply constraints rather than speculative excess.

The divergence between Eastern physical accumulation and Western ETF selling created unusual market dynamics. Shanghai Gold Exchange premiums at six times normal levels suggest Chinese buyers view current prices as attractive for long-term accumulation. US Mint production constraints, with American Gold Eagle uncirculated coins capped at just 7,500 units, added to physical market tightness.

Retail investment patterns showed geographic divergence with Eastern markets driving demand while Western investors preferred ETF exposure. Asian markets now command 52% of global precious metals demand, fundamentally shifting price discovery dynamics eastward. Chinese retail investors' 124 tonne Q1 accumulation contrasted sharply with US bar and coin demand dropping 22% to 19.3 tonnes, a 5-year low.

Conclusion: Consolidation creates opportunity as fundamentals remain intact

The week of June 23rd, 2025 saw precious metals consolidate recent gains while maintaining exceptional year-to-date performance. Technical indicators suggest healthy profit-taking rather than trend reversal, with key support levels holding and momentum indicators resetting from overbought conditions. The fundamental backdrop—combining central bank accumulation, supply deficits, geopolitical tensions, and stagflation risks—remains powerfully bullish.

Near-term price action will likely depend on Fed policy evolution and geopolitical developments. The $3,351 level in gold and $35.25 in silver represent critical support that bulls must defend. Upside targets remain ambitious but achievable given current dynamics, with $3,700-4,000 gold and $38-40 silver representing consensus institutional targets. The contracting gold-silver ratio suggests silver may offer superior returns for risk-tolerant investors.

As 2025's second half begins, precious metals appear well-positioned to resume their uptrend once current consolidation completes. Central banks show no signs of slowing purchases, physical premiums indicate robust underlying demand, and macro conditions increasingly favor hard assets over fiat currencies. While volatility should be expected around Fed meetings and geopolitical flashpoints, the multi-year bull market in precious metals appears firmly intact with significant upside potential remaining.