OCBC cut its end-2026 price forecasts for gold and silver to $4,360 and $67, respectively, pointing to a tougher near-term macro backdrop. The bank cited higher real yields, a firmer US Dollar (USD) and slower ETF demand, alongside Federal Reserve expectations shifting in a more hawkish direction.
Despite the lower targets, OCBC maintained a mildly upward medium-term path for both metals, keeping the diversification case for gold and the structural deficit narrative for silver. It said a more durable turn would require an improved macro setting, such as easing real yields and a softer USD, or a clearer unwind of hawkish Fed expectations; otherwise, rallies may fade and prices could consolidate below prior highs.
Challenging Macro Backdrop for Precious Metals
Our forecasts for gold and silver have been lowered, but we still see prices moving higher in the long run. The revision simply reflects a tougher short-term situation for precious metals. This is not a change in our medium-term belief in gold and silver.
The environment has become more challenging due to higher real yields, a stronger US dollar, and slower demand from exchange-traded funds (ETFs). For instance, the 10-year real yield has recently climbed to over 2.0%, while the US Dollar Index (DXY) is holding firm above 106. These factors make non-yielding assets like gold less attractive for now.
Given this setup, we expect any price rallies in the coming weeks will likely be short-lived and sold into. Traders should consider strategies that benefit from this, such as selling call options on strength or buying puts on bounces that fail to hold. This aligns with the expectation that both metals will spend time consolidating below their previous highs.
The recent slowdown in ETF demand confirms this cautious view. We have seen consistent outflows from major gold ETFs like the SPDR Gold Shares (GLD) over the past month, a clear sign of waning investor appetite. Until these flows reverse, a sustained move higher will be difficult.
Outlook and Trading Implications
This means we anticipate prices will be stuck in a range, with the strong dollar and high yields creating a ceiling. This environment is well-suited for derivative strategies that profit from sideways movement or a gradual decline in price. The key triggers for a breakout, like a clear shift from the Federal Reserve, are not yet visible.
This period is reminiscent of past cycles where hawkish Fed policy temporarily suppressed precious metals before an eventual easing cycle sent them higher. The current macro headwinds are significant, but they do not change the long-term case for gold as a diversifier and silver’s supportive supply-demand story. We will be watching for signs of easing real yields and a softer dollar as signals for a turnaround.
