Gold and silver prices continue to show strong fluctuations as the precious metals market becomes increasingly unpredictable in the context of interest rate pressure and high US bond yields.
Although gold and silver are still stuck in the accumulation zone and face many short-term resistance forces, most analysts still maintain a positive view of the long-term outlook for the precious metal group.
According to experts, high real yields are still the biggest threat to gold and silver. This pressure has not only not cooled down but is also strengthening as the yield of 30-year US bonds remains above 5%, while the yield of 10-year bonds is hovering above 4.5%.
The high interest rate level increases the opportunity cost of holding non-performing assets such as gold and silver, while making the market increasingly lean towards the possibility that the Fed will have to maintain a tight monetary policy for longer, and may even continue to raise interest rates.
However, analysts believe that the market is currently entering a much more sensitive stage than before.
Accordingly, there is a very fragile line between simply increasing yields putting pressure on gold and increasing yields becoming a signal of deeper risks in the global financial system.
If investors simply demand higher yields due to persistent inflation, gold and silver may continue to be under pressure. But if the bond market begins to become unstable and investors doubt the ability of government bonds to maintain a safe asset role, then the role of gold and silver may change completely.
In that scenario, gold and silver are no longer seen as "non-profit assets", but become "non-risky partner assets".
According to many experts, this is a very important difference in the current cycle.
Pressure from increased borrowing costs, prolonged inflation, energy prices anchored at high levels and fiscal weakness are making the market closer to a greater risk of instability. The sell-off in the bond market is still taking place relatively orderly, but the psychology can reverse very quickly if yields continue to increase sharply.
For gold, many experts assess that the risk-profit structure is currently becoming increasingly asymmetry.
This precious metal can still continue to adjust if the market increases expectations of the Fed raising interest rates, real yields increase and the USD strengthens. However, these pressures are gradually strengthening the role of gold as a strategic value-preserving asset in the long term.
Many international financial institutions have also begun to talk more and more about the weakening of the traditional 60/40 asset allocation model between stocks and bonds, replaced by a trend towards a 60/20/20 structure with increasing proportions of hard assets such as gold and commodities.
Meanwhile, silver is assessed to have stronger fluctuations but also possesses many notable supporting factors.
Although silver has not yet overcome important resistance zones, its dual role as both a currency and an industrial metal is helping silver have more room to benefit if global cash flow begins to leave high-valued financial assets to switch to tangible assets.
Analysts believe that if global liquidity continues to tighten, energy prices remain high and pressure on the bond market spreads to the stock and credit markets, silver may benefit similarly to gold, and will also be further supported by prolonged supply shortages and stable industrial demand.
Accordingly, the biggest message for investors at this time is that gold and silver are not immune to high interest rate pressure in the short term. However, the factors that are currently putting pressure on precious metals can also become catalysts to promote stronger demand return in the near future.
