Gold and silver prices may fall further before finding a solid bottom, according to analysts. Although recent geopolitical tensions and economic uncertainty have supported gold, history shows that sharp rallies in precious metals are often followed by long periods of decline. Earlier this year, silver surged dramatically, rising 72% in a month and 322% since the start of 2025. Gold also performed strongly, climbing 30% in a month and 115% over the same period. However, after reaching peak levels in late January, both metals experienced sharp corrections. Silver dropped 37% in just over a week and, despite a rebound, has underperformed gold. Analysts noted that similar rallies in 1980 and 2011 pushed silver close to $50 per ounce before prices fell significantly over the following years. Past market cycles show that declines of 40% to 70% are common after extreme price spikes, and it can take months or even years to reach a true price floor.

In the short term, the conflict involving the United States, Israel, and Iran has increased safe-haven demand. Gold rose as oil prices jumped and stock markets fell. However, some of this risk may already be priced in. Trade uncertainty has also grown after the U.S. Supreme Court limited former President Trump’s tariff authority, though new temporary tariffs have been introduced. Meanwhile, mining giant Newmont expects gold production to dip in 2026 before recovering in 2027. Silver ETFs saw inflows of 18 million ounces last week, though total holdings remain below levels seen earlier this year. At the time of writing, gold traded near $5,294 per ounce, while silver fell to about $87.66.

In summary, while geopolitical risks and investor demand are supporting prices, historical patterns suggest gold and silver may need more time and possibly lower prices before reaching a stable bottom.

Credit: Independent News Pakistan (INP)