Sive Morten
Special Consultant to the FPA
- Messages
- 22,093
FUNDAMENTALS
Gold market remains in focus. Big events, big changes. A lot of them we covered with reports in a recent few weeks. Specific of a gold market is it has absolutely different drivers compares to financial markets, such as bonds, FX, equities etc. This makes it to react differently on the same events. Yesterday we've made in-depth analysis of situation around BoJ and its rate policy. Does it matter for gold? Absolutely. But, this is more supportive to gold rather than negative. Despite that in a hot stage of crisis, gold also could drop in the beginning due to lack of cash on the markets. Geopolitical situation remains unstable. Now it becomes clear that Neocons Liberals are grounded in the EU and trying to keep the same politics. World is changing and already changed and this confrontations promises nothing good to global stability and wealth, not even mentioning Venezuela scenario and some others.
MARKET OVERVIEW
Gold steadied near a record high, as traders weighed the outlook for US monetary policy following economic data that supported the case for interest-rate cuts. The core US consumer price index rose at the slowest pace since early 2021, according to data released Thursday, bolstering the case for lower borrowing costs – a tailwind for non-yielding precious metals. However, the latest inflation report was muddled by a record six-week government shutdown that ended last month. Since delivering its third straight rate cut last week, the Federal Reserve has been ambiguous about the future pace of monetary easing. Traders are assigning a roughly 20% chance of a reduction in January, while US President Donald Trump has advocated aggressively for lowering rates next year.
Platinum has also more than doubled this year. The metal’s surge to above $1,980 an ounce — the highest since 2008 — has come as the London market shows signs of tightening, with banks parking supplies in the US to insure against the risk of tariffs. Open interest and trading volumes have surged in Guangzhou for the nearest contract in June, while prices on the exchange have risen well above other international benchmarks, adding fuel to the global rally.
Against a tight background, the metal has been hit by a wave of investment that poured into precious metals this year, a rush that helped silver to also double in price and soar to a record. As traders wait for the outcome of Washington’s Section 232 probe — which could lead to tariffs or trade restrictions on platinum — more than 600,000 ounces of the metal are sitting in US warehouses, an amount much higher than usual. In China, the newly launched platinum futures on GFEX have attracted a wave of speculators, with prices rising well above other international benchmarks.
The electric-vehicle transition had long weighed on platinum and its sister metal palladium, both of which are used in catalytic converters to filter pollution. Still, slower-than-expected adoption of EVs in some markets has boosted sentiment, and the European Union this week eased requirements that would have halted sales of new gasoline and diesel-fueled cars starting in 2035.
Russia's Nornickel, the world's largest palladium producer, said in a metals market review that including investment demand, the palladium market could see a deficit of 0.2 million ounces this year.
Silver soared to a record high on Friday, bolstered by investment demand and a supply tightness. Silver has soared 132% this year, far outpacing gold's 65% rise, driven by robust investment demand and supply constraints. Demand from India and China, coupled with momentum buying, have added to this perfect storm for the metal, analysts said. Some analysts remain bullish on silver, expecting the metal to break the $70/oz milestone next year, especially if U.S. interest rate cuts support the appetite for precious metals. However, others cautioned that the historically volatile metal remains vulnerable to steep corrections, especially in correlation to gold.
Meanwhile, heightened geopolitical tensions could enhance the appeal of precious metals, and events in Venezuela, where US President Donald Trump has ordered a blockade of all sanctioned oil tankers, have also given them a boost this week.
On Tuesday, data showed a stronger-than-expected increase of 64,000 jobs in the U.S. last month, but the unemployment rate rose to 4.6%, its highest level since September 2021. U.S. rate futures still expect two cuts of 25 basis points each in 2026, pricing in 59 bps of easing next year. Non-yielding gold tends to thrive in a low-interest rate environment.
BIG HOUSES OUTLOOK
Gold’s record-setting rally and persistent weakness in crude have been two of the standout features of global commodities this year. Goldman Sachs Group Inc. reckons both those trends will extend into 2026. Goldman Sachs sees gold prices climbing 14% to $4,900 per ounce by December 2026 in its base case, it said in a note on Thursday, while citing upside risks to this view due to a potential broadening of diversification to private investors. In a note in which the bank discussed its views on commodities for 2026, Goldman Sachs said it expects structurally high central bank demand and cyclical support from U.S. Federal Reserve interest rate cuts to lift the price of gold. It continues to recommend long exposure in the yellow metal.
The bank also forecast the price of copper to consolidate in 2026 and average $11,400 per metric ton under its base case that uncertainty over tariffs will linger until a possible announcement in mid-2026 that the U.S. will implement tariffs on refined copper in 2027.
Commodities as a whole are on course for a modest advance this year, but the sector’s climb masks huge variations in the underlying performances of heavyweight materials. While gold has risen on central-bank buying, interest-rate cuts from the US Federal Reserve, and inflows to exchange-traded funds, crude has been hurt by widespread concerns about a huge glut.
Bullion is expected to average $4,500 an ounce in 2026, according to Nicky Shiels, head of research at precious metals refiner MKS Pamp SA, joining a chorus of predictions that it will push higher. Gold will likely consolidate in the near term “before establishing a milder, more sustainable bullish trajectory” after this year’s “parabolic surge,” Shiels said in a note on Tuesday.
Analysts at JP Morgan, Bank of America and consultancy Metals Focus now see bullion hitting $5,000 per troy ounce in 2026.BofA strategist Michael Widmer said expectations of further gains or portfolio diversification are driving the buying, with impetus from U.S. fiscal deficits, efforts to narrow the U.S. current account deficit and a weak dollar policy. Philip Newman, managing director at Metals Focus, said further support stemmed from worries about U.S. Federal Reserve independence, tariff disputes and geopolitics including war in Ukraine and Russia's interaction with NATO countries in Europe.
For a fifth year running, central bank diversification of reserves from dollar-denominated assets should give a foundation for gold in 2026 as they buy when investor positioning is stretched, money rotates and prices fall, analysts said.
JP Morgan analysts estimate that for prices to stay flat, quarterly central bank and investment demand of around 350 metric tons is needed. They forecast this buying to average 585 tons per quarter in 2026. Investor holdings of gold as a share of total assets under management have risen to 2.8% from pre-2022 levels of 1.5%, JP Morgan's Shearer said, adding that while elevated, this was not necessarily a ceiling.
Morgan Stanley forecasts gold at $4,500 per ounce by mid-2026, while JP Morgan expects average prices at above $4,600 in Q2 and more than $5,000 in Q4 and Metals Focus forecasts gold at $5,000 by end-2026. Morgan Stanley on Tuesday projected gold prices would see smaller gains in 2026 as central banks and exchange-traded funds reduce purchases, but anticipated rate cuts and a weaker dollar would sustain upward momentum. The bank forecast gold prices at $4,800 an ounce by the fourth quarter, citing stronger Chinese retail demand, heightened central bank buying and global growth concerns as among positive factors.
Silver is expected to lag gold, with 2025 marking a peak deficit amid falling solar installations in 2026. Morgan Stanley forecasts platinum at $1,775 an ounce and palladium at $1,325 an ounce in 2026, reflecting structural imbalances and varying demand drivers.
Still, Analysts expect gold's rally to be less dramatic in 2026. "The world has stabilised a bit," said Macquarie, whose economists forecast a revival in global growth, central bank easing tapering off and relatively high real interest rates. Macquarie sees average prices at $4,225 in 2026, slightly below Wednesday's spot gold price of $4,317.
Fed easing brought a new visible institutional investor in gold in the form of crypto company Tether, issuer of the world's largest stablecoin. Quarterly reports show Tether bought about 26 tons of gold in the third quarter, five times more than China's central bank reported buying. Further investment pool expansion could come from Asia as India allowed some pension funds to buy gold and silver ETFs.
UBS in their global forecast for 2026 writes:
A late-2025 consolidation was unsurprising after such a rapid rally, but we see further upside to gold and silver in 2026. Gold remains a valuable hedge, supported by central bank buying, large fiscal deficits, and ongoing geopolitical risks. Silver also benefits from rising demand in electronics and photovoltaics, UBS said. Looking ahead to 2026, both copper and aluminum are projected to encounter further supply shortages that may push prices higher. The global transition to clean energy and electrification continues to drive demand for these metals, making them a key structural investment. We believe a modest allocation into gold —of up to 5% of total assets—can enhance diversification and buffer against systemic risks.
Finally, Bullion faces a year of two halves in 2026, peaking near $4,800 before the end of the second quarter before retreating, ANZ Group Holdings Ltd. analysts Soni Kumari and Daniel Hynes said in a note.
WHAT ELSE?
Yesterday we've discussed all background of BoJ policy and recent Job market report. On a gold market we have some specific issues as well. First is, US banks have closed all their short positions in silver. This could decrease buyers activity in short-term and could point on a local top in silver. At least until banks' demand is not replaced by other one - industrial, ETF etc.
Second is, Unofficial gold purchases by global central banks since 2010 have reached approximately 9,500 tons. This is ~3,700 tons, or +64%, more than the volume that these institutions officially declared. Unofficial purchases accelerated sharply in 2022. Since then, central banks have accumulated about 3,500 tons of gold, which accounts for 37% of all purchases since 2010. China alone purchased 118 tons of gold in the third quarter of 2025, which represents a 55% year-on-year increase.
According to Money Metals estimates, China's gold reserves rose to a record high of 5,411 tons last quarter, which is significantly higher than the 2,304 tons officially declared by the People's Bank of China.
The United States has almost doubled its gold imports from European Union countries this year, according to data from the US Statistical Service. The largest European suppliers were Belgium, Italy, and Germany (!! Where is Switzerland?). Over the three quarters of the year, the United States imported $223.6 million worth of gold from the EU, which is 1.7 times more than the figure for the same period last year. In September, deliveries increased eightfold to $44.2 million, but they were still 5% lower in annual terms.
Belgium led among the EU countries with a supply volume of $115 million. It was followed by Italy with $50.1 million, Germany with $40.3 million, France with $15.2 million, and Poland with $1 million. In total, the US has purchased $24.5 billion worth of gold since the beginning of the year. The main volumes came from Switzerland ($7.3 billion), Canada ($5.6 billion), Australia ($2.8 billion), Mexico ($2.1 billion), and South Africa ($1.7 billion). The EU countries only ranked second among the suppliers. Does the US prepare to something?
In general, regarding gold, a cunning plan could be for the Fed to stop providing dollar liquidity to European central banks through swap lines, which are used for exchanging two currencies. Now swap lines stand in USD and EUR. How it works - the Fed transfers dollars and in return receives the equivalent in euros at a predetermined exchange rate, with a reverse exchange on the maturity date. Thanks to this, the Fed does not bear currency risk: the exchange rate for the reverse exchange is fixed at the time of the transaction, and the credit risk for the final banks lies with the foreign central bank, not the Fed.
Gold market remains in focus. Big events, big changes. A lot of them we covered with reports in a recent few weeks. Specific of a gold market is it has absolutely different drivers compares to financial markets, such as bonds, FX, equities etc. This makes it to react differently on the same events. Yesterday we've made in-depth analysis of situation around BoJ and its rate policy. Does it matter for gold? Absolutely. But, this is more supportive to gold rather than negative. Despite that in a hot stage of crisis, gold also could drop in the beginning due to lack of cash on the markets. Geopolitical situation remains unstable. Now it becomes clear that Neocons Liberals are grounded in the EU and trying to keep the same politics. World is changing and already changed and this confrontations promises nothing good to global stability and wealth, not even mentioning Venezuela scenario and some others.
MARKET OVERVIEW
Gold steadied near a record high, as traders weighed the outlook for US monetary policy following economic data that supported the case for interest-rate cuts. The core US consumer price index rose at the slowest pace since early 2021, according to data released Thursday, bolstering the case for lower borrowing costs – a tailwind for non-yielding precious metals. However, the latest inflation report was muddled by a record six-week government shutdown that ended last month. Since delivering its third straight rate cut last week, the Federal Reserve has been ambiguous about the future pace of monetary easing. Traders are assigning a roughly 20% chance of a reduction in January, while US President Donald Trump has advocated aggressively for lowering rates next year.
Platinum has also more than doubled this year. The metal’s surge to above $1,980 an ounce — the highest since 2008 — has come as the London market shows signs of tightening, with banks parking supplies in the US to insure against the risk of tariffs. Open interest and trading volumes have surged in Guangzhou for the nearest contract in June, while prices on the exchange have risen well above other international benchmarks, adding fuel to the global rally.
Against a tight background, the metal has been hit by a wave of investment that poured into precious metals this year, a rush that helped silver to also double in price and soar to a record. As traders wait for the outcome of Washington’s Section 232 probe — which could lead to tariffs or trade restrictions on platinum — more than 600,000 ounces of the metal are sitting in US warehouses, an amount much higher than usual. In China, the newly launched platinum futures on GFEX have attracted a wave of speculators, with prices rising well above other international benchmarks.
The electric-vehicle transition had long weighed on platinum and its sister metal palladium, both of which are used in catalytic converters to filter pollution. Still, slower-than-expected adoption of EVs in some markets has boosted sentiment, and the European Union this week eased requirements that would have halted sales of new gasoline and diesel-fueled cars starting in 2035.
Russia's Nornickel, the world's largest palladium producer, said in a metals market review that including investment demand, the palladium market could see a deficit of 0.2 million ounces this year.
Silver soared to a record high on Friday, bolstered by investment demand and a supply tightness. Silver has soared 132% this year, far outpacing gold's 65% rise, driven by robust investment demand and supply constraints. Demand from India and China, coupled with momentum buying, have added to this perfect storm for the metal, analysts said. Some analysts remain bullish on silver, expecting the metal to break the $70/oz milestone next year, especially if U.S. interest rate cuts support the appetite for precious metals. However, others cautioned that the historically volatile metal remains vulnerable to steep corrections, especially in correlation to gold.
Meanwhile, heightened geopolitical tensions could enhance the appeal of precious metals, and events in Venezuela, where US President Donald Trump has ordered a blockade of all sanctioned oil tankers, have also given them a boost this week.
On Tuesday, data showed a stronger-than-expected increase of 64,000 jobs in the U.S. last month, but the unemployment rate rose to 4.6%, its highest level since September 2021. U.S. rate futures still expect two cuts of 25 basis points each in 2026, pricing in 59 bps of easing next year. Non-yielding gold tends to thrive in a low-interest rate environment.
BIG HOUSES OUTLOOK
Gold’s record-setting rally and persistent weakness in crude have been two of the standout features of global commodities this year. Goldman Sachs Group Inc. reckons both those trends will extend into 2026. Goldman Sachs sees gold prices climbing 14% to $4,900 per ounce by December 2026 in its base case, it said in a note on Thursday, while citing upside risks to this view due to a potential broadening of diversification to private investors. In a note in which the bank discussed its views on commodities for 2026, Goldman Sachs said it expects structurally high central bank demand and cyclical support from U.S. Federal Reserve interest rate cuts to lift the price of gold. It continues to recommend long exposure in the yellow metal.
The bank also forecast the price of copper to consolidate in 2026 and average $11,400 per metric ton under its base case that uncertainty over tariffs will linger until a possible announcement in mid-2026 that the U.S. will implement tariffs on refined copper in 2027.
Commodities as a whole are on course for a modest advance this year, but the sector’s climb masks huge variations in the underlying performances of heavyweight materials. While gold has risen on central-bank buying, interest-rate cuts from the US Federal Reserve, and inflows to exchange-traded funds, crude has been hurt by widespread concerns about a huge glut.
Bullion is expected to average $4,500 an ounce in 2026, according to Nicky Shiels, head of research at precious metals refiner MKS Pamp SA, joining a chorus of predictions that it will push higher. Gold will likely consolidate in the near term “before establishing a milder, more sustainable bullish trajectory” after this year’s “parabolic surge,” Shiels said in a note on Tuesday.
Analysts at JP Morgan, Bank of America and consultancy Metals Focus now see bullion hitting $5,000 per troy ounce in 2026.BofA strategist Michael Widmer said expectations of further gains or portfolio diversification are driving the buying, with impetus from U.S. fiscal deficits, efforts to narrow the U.S. current account deficit and a weak dollar policy. Philip Newman, managing director at Metals Focus, said further support stemmed from worries about U.S. Federal Reserve independence, tariff disputes and geopolitics including war in Ukraine and Russia's interaction with NATO countries in Europe.
For a fifth year running, central bank diversification of reserves from dollar-denominated assets should give a foundation for gold in 2026 as they buy when investor positioning is stretched, money rotates and prices fall, analysts said.
JP Morgan analysts estimate that for prices to stay flat, quarterly central bank and investment demand of around 350 metric tons is needed. They forecast this buying to average 585 tons per quarter in 2026. Investor holdings of gold as a share of total assets under management have risen to 2.8% from pre-2022 levels of 1.5%, JP Morgan's Shearer said, adding that while elevated, this was not necessarily a ceiling.
Morgan Stanley forecasts gold at $4,500 per ounce by mid-2026, while JP Morgan expects average prices at above $4,600 in Q2 and more than $5,000 in Q4 and Metals Focus forecasts gold at $5,000 by end-2026. Morgan Stanley on Tuesday projected gold prices would see smaller gains in 2026 as central banks and exchange-traded funds reduce purchases, but anticipated rate cuts and a weaker dollar would sustain upward momentum. The bank forecast gold prices at $4,800 an ounce by the fourth quarter, citing stronger Chinese retail demand, heightened central bank buying and global growth concerns as among positive factors.
Silver is expected to lag gold, with 2025 marking a peak deficit amid falling solar installations in 2026. Morgan Stanley forecasts platinum at $1,775 an ounce and palladium at $1,325 an ounce in 2026, reflecting structural imbalances and varying demand drivers.
Still, Analysts expect gold's rally to be less dramatic in 2026. "The world has stabilised a bit," said Macquarie, whose economists forecast a revival in global growth, central bank easing tapering off and relatively high real interest rates. Macquarie sees average prices at $4,225 in 2026, slightly below Wednesday's spot gold price of $4,317.
Fed easing brought a new visible institutional investor in gold in the form of crypto company Tether, issuer of the world's largest stablecoin. Quarterly reports show Tether bought about 26 tons of gold in the third quarter, five times more than China's central bank reported buying. Further investment pool expansion could come from Asia as India allowed some pension funds to buy gold and silver ETFs.
UBS in their global forecast for 2026 writes:
A late-2025 consolidation was unsurprising after such a rapid rally, but we see further upside to gold and silver in 2026. Gold remains a valuable hedge, supported by central bank buying, large fiscal deficits, and ongoing geopolitical risks. Silver also benefits from rising demand in electronics and photovoltaics, UBS said. Looking ahead to 2026, both copper and aluminum are projected to encounter further supply shortages that may push prices higher. The global transition to clean energy and electrification continues to drive demand for these metals, making them a key structural investment. We believe a modest allocation into gold —of up to 5% of total assets—can enhance diversification and buffer against systemic risks.
Finally, Bullion faces a year of two halves in 2026, peaking near $4,800 before the end of the second quarter before retreating, ANZ Group Holdings Ltd. analysts Soni Kumari and Daniel Hynes said in a note.
WHAT ELSE?
Yesterday we've discussed all background of BoJ policy and recent Job market report. On a gold market we have some specific issues as well. First is, US banks have closed all their short positions in silver. This could decrease buyers activity in short-term and could point on a local top in silver. At least until banks' demand is not replaced by other one - industrial, ETF etc.
Second is, Unofficial gold purchases by global central banks since 2010 have reached approximately 9,500 tons. This is ~3,700 tons, or +64%, more than the volume that these institutions officially declared. Unofficial purchases accelerated sharply in 2022. Since then, central banks have accumulated about 3,500 tons of gold, which accounts for 37% of all purchases since 2010. China alone purchased 118 tons of gold in the third quarter of 2025, which represents a 55% year-on-year increase.
According to Money Metals estimates, China's gold reserves rose to a record high of 5,411 tons last quarter, which is significantly higher than the 2,304 tons officially declared by the People's Bank of China.
The United States has almost doubled its gold imports from European Union countries this year, according to data from the US Statistical Service. The largest European suppliers were Belgium, Italy, and Germany (!! Where is Switzerland?). Over the three quarters of the year, the United States imported $223.6 million worth of gold from the EU, which is 1.7 times more than the figure for the same period last year. In September, deliveries increased eightfold to $44.2 million, but they were still 5% lower in annual terms.
Belgium led among the EU countries with a supply volume of $115 million. It was followed by Italy with $50.1 million, Germany with $40.3 million, France with $15.2 million, and Poland with $1 million. In total, the US has purchased $24.5 billion worth of gold since the beginning of the year. The main volumes came from Switzerland ($7.3 billion), Canada ($5.6 billion), Australia ($2.8 billion), Mexico ($2.1 billion), and South Africa ($1.7 billion). The EU countries only ranked second among the suppliers. Does the US prepare to something?
In general, regarding gold, a cunning plan could be for the Fed to stop providing dollar liquidity to European central banks through swap lines, which are used for exchanging two currencies. Now swap lines stand in USD and EUR. How it works - the Fed transfers dollars and in return receives the equivalent in euros at a predetermined exchange rate, with a reverse exchange on the maturity date. Thanks to this, the Fed does not bear currency risk: the exchange rate for the reverse exchange is fixed at the time of the transaction, and the credit risk for the final banks lies with the foreign central bank, not the Fed.
