The sharp drop in gold prices in the first months of 2026 is not yet a sign of reversing the long-term upward trend, according to Maria Smirnova, Managing Partner at Sprott Inc., Senior Portfolio Director and Investment Director at Sprott Asset Management.
In the latest report "Gold and Silver: Looking beyond the correction", Ms. Smirnova said that the first 7 months of 2026 show that the correction phases are normal developments in a long-term upward cycle of precious metals.
According to Sprott, the foundational factors supporting gold and silver are still maintained, notably increased public debt, prolonged budget deficits, central bank demand for gold and demand for silver in industry.
Previously, gold had increased by more than 64.58% in 2025, while silver increased by 147.95%. The upward momentum continued into January 2026, bringing both precious metals to new record highs.
After that, the market entered a significant correction. According to Sprott, gold fell to the 4,000 - 4,100 USD/ounce range, while silver retreated to around 55 - 60 USD/ounce before gradually stabilizing.
However, Sprott emphasized that this adjustment does not reflect the weakening of fundamentals. Gold and silver still maintained significantly higher prices than a year ago, and began to recover as selling pressure eased.
Gold prices still have a long-term support base
Sprott divides the developments of gold in 2026 into three phases. The beginning of the year witnessed a sharp increase as investors paid more attention to public debt prospects, budget deficits and the role of traditional reserves.
In this period, the gold demand of central banks continues to play an important role. The diversification of reserves by central banks helps strengthen the role of gold as a strategic reserve asset.
After peaking in January, gold entered a correction phase. Sprott believes that part of the selling pressure comes from investors using leverage to narrow positions at a time when financial conditions change.
By early summer, selling pressure had decreased significantly. Gold prices stabilized around the 4,000 USD/ounce range, while physical gold demand improved and central banks continued to buy in.
According to Sprott, the buying power of central banks has created a relatively solid foundation for gold prices in the correction phase. This shows the difference between short-term investment cash flow and long-term strategic gold demand.
Sprott therefore believes that fluctuations in 2026 do not weaken the long-term upward trend of gold. Conversely, the adjustment helped the market test the strength of this trend.
Silver prices are assessed to have a lot of potential
While gold is mainly supported by its monetary and reserve asset roles, silver has an additional important driving force from industrial demand.
According to Sprott, silver experienced a stronger correction than gold in the second quarter as the industrial metal group weakened and speculative positions narrowed. Smaller market size than gold also caused silver prices to fluctuate more frequently during correction phases.
However, the long-term outlook for silver is still rated very positively.
Silver demand continues to increase from many sectors such as solar energy, electrification, artificial intelligence infrastructure, advanced electronics and investment in power grids.
While demand is increasing, the supply of silver mining has not kept up. Sprott believes that this situation has led to many consecutive years of the silver market falling into structural deficits, thereby continuing to reduce surface silver inventories.
The recovery of silver prices above 60 USD/ounce is assessed by Sprott as a sign that investors are returning to pay attention to the long-term supply-demand factors of this metal.
Looking towards the rest of 2026, Sprott believes that investors need to distinguish between cyclical volatility and long-term uptrend.
According to this organization, the impact of high interest rates, tighter liquidity and a strong USD have been partly reflected in the price. Meanwhile, the foundational factors supporting gold and silver remain.
With gold, central bank buying demand, public debt and fiscal deficit continue to strengthen the role of this precious metal as a strategic reserve asset.
With silver, the outlook is also supported by the role of the currency and increasing industrial demand.
Sprott believes that periods of strong volatility are an unavoidable characteristic of a long-term upward price market. The correction in 2026 may even have improved the long-term risk-reward balance of gold and silver.
