SINGAPORE: Gold and silver prices are expected to continue rising in the long term, analysts said, maintaining optimistic forecasts for the precious metals despite recent volatility.
Major financial institutions have issued confident projections for both metals. OCBC has upgraded its 12-month forecast to US$4,600 per ounce for gold and US$56 per ounce for silver, while Maybank predicted that gold could reach US$4,800 per ounce by the end of next year. HSBC previously projected gold hitting US$5,000 per ounce in 2026 berfore the recent consolidation.
As of Monday morning, gold traded at US$4,076 per ounce and silver at US$48.21 per ounce, down from recent peaks above US$4,300 and US$54 per ounce respectively.
Mr Manpreet Gill, chief investment officer for Africa, Middle East and Europe at Standard Chartered's wealth solutions unit, expects gold prices to advance at a more gradual pace in the coming months, with increased two-way volatility.
Silver prices will be held back with "strong technical resistance" around the US$50 mark and weaker US economic data, he said.
"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.
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.
Several analysts viewed the current pullback as an opportune moment for strategic buying. The current sell-off is a "viable entry point" since demand for gold is likely to persist, said Mr Craig Bell, head of multi asset portfolio solutions at Eastspring Investments.
Mr Eddy Loh, chief investment officer of group wealth management at Maybank, said medium-term structural demand remains "robust" as central banks continue diversifying their reserves.
"The structure of the market and key drivers remain and have the potential to drive prices even higher," said James Steel, chief precious metals analyst at HSBC.
Mr Loh recommended that balanced risk profile investors allocate 5 per cent of their portfolio to gold. Those who do not own gold can start building some exposure at this time, while investors whose allocation is below 5 per cent can add to it.
Similarly, Mr Gill suggested that 5 to 7 per cent is appropriate for most diversified portfolios.
While gold does not generate dividends, it has delivered strong long-term returns and offers portfolio diversification benefits, he said.
"Investors should look to average into strategic positions over time. As part of an averaging-in approach, the current pullback does provide an opportunity to add given the long-term outlook," he added.
The recommendation for silver is more nuanced, said Mr Bell of Eastspring Investments.
While medium-term prospects appear positive due to industrial demand and inflows from exchange-traded funds, near-term volatility remains elevated.
"Silver does not have the same central bank demand (as gold) so adding should be done cautiously and appears to us more speculative," he said.
Mr Gill cautioned against treating silver merely as a "gold catch-up" trade. "While there is some logic in this, silver is also highly sensitive to industrial demand. A sharp growth downturn, thus, would pose a risk to silver."
The analysts also identified possible risks for gold, such as a reversal in the Federal Reserve's policy or an easing of geopolitical tensions. Both metals may see short-term corrections given that they are still relatively near record highs.
"Retail investors looking to invest in gold and silver must be mindful that having already rallied sharply, both precious metals are susceptible to intermittent pullbacks and even sharp ones from time to time," said OCBC's Mr Menon.
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Major financial institutions have issued confident projections for both metals. OCBC has upgraded its 12-month forecast to US$4,600 per ounce for gold and US$56 per ounce for silver, while Maybank predicted that gold could reach US$4,800 per ounce by the end of next year. HSBC previously projected gold hitting US$5,000 per ounce in 2026 berfore the recent consolidation.
As of Monday morning, gold traded at US$4,076 per ounce and silver at US$48.21 per ounce, down from recent peaks above US$4,300 and US$54 per ounce respectively.
Mr Manpreet Gill, chief investment officer for Africa, Middle East and Europe at Standard Chartered's wealth solutions unit, expects gold prices to advance at a more gradual pace in the coming months, with increased two-way volatility.
Silver prices will be held back with "strong technical resistance" around the US$50 mark and weaker US economic data, he said.
"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.
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BUY THE DIP?
Several analysts viewed the current pullback as an opportune moment for strategic buying. The current sell-off is a "viable entry point" since demand for gold is likely to persist, said Mr Craig Bell, head of multi asset portfolio solutions at Eastspring Investments.
Mr Eddy Loh, chief investment officer of group wealth management at Maybank, said medium-term structural demand remains "robust" as central banks continue diversifying their reserves.
"The structure of the market and key drivers remain and have the potential to drive prices even higher," said James Steel, chief precious metals analyst at HSBC.
Mr Loh recommended that balanced risk profile investors allocate 5 per cent of their portfolio to gold. Those who do not own gold can start building some exposure at this time, while investors whose allocation is below 5 per cent can add to it.
Similarly, Mr Gill suggested that 5 to 7 per cent is appropriate for most diversified portfolios.
While gold does not generate dividends, it has delivered strong long-term returns and offers portfolio diversification benefits, he said.
"Investors should look to average into strategic positions over time. As part of an averaging-in approach, the current pullback does provide an opportunity to add given the long-term outlook," he added.
The recommendation for silver is more nuanced, said Mr Bell of Eastspring Investments.
While medium-term prospects appear positive due to industrial demand and inflows from exchange-traded funds, near-term volatility remains elevated.
"Silver does not have the same central bank demand (as gold) so adding should be done cautiously and appears to us more speculative," he said.
Mr Gill cautioned against treating silver merely as a "gold catch-up" trade. "While there is some logic in this, silver is also highly sensitive to industrial demand. A sharp growth downturn, thus, would pose a risk to silver."
The analysts also identified possible risks for gold, such as a reversal in the Federal Reserve's policy or an easing of geopolitical tensions. Both metals may see short-term corrections given that they are still relatively near record highs.
"Retail investors looking to invest in gold and silver must be mindful that having already rallied sharply, both precious metals are susceptible to intermittent pullbacks and even sharp ones from time to time," said OCBC's Mr Menon.
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