The precious metals market has recently exhibited a dual trend of capital inflows and sentiment recovery. Although holdings in gold and silver exchange-traded funds have rebounded significantly from previous lows, overall investor sentiment has not fully caught up with recent price movements. Amid a complex web of macroeconomic factors, including ongoing geopolitical conflicts involving Iran, persistent U.S. inflation, and massive debt, the safe-haven and allocation attributes of physical precious metals are once again drawing market attention.
Looking at the year-to-date performance, gold prices once surged to a high of $5,595 per ounce in late January, followed by the deepest and longest correction since 2022. After a consolidation lasting about six months with a 29% decline, gold prices have recently reclaimed key moving averages. From a capital flow perspective, gold ETF holdings, which hit a trough of 96.2 million ounces in late July, have recovered to around 98.9 million ounces, essentially recapturing the losses seen at the beginning of the year. Meanwhile, silver ETF holdings increased from a low of 780.8 million ounces in mid-July to 801.2 million ounces. However, compared to the year's highs, the scale of gold and silver ETF holdings still shows a certain gap, indicating that the capital inflow remains a gradual process.
In terms of investor sentiment, market enthusiasm has cooled significantly from the frenzy seen in early last year. Earlier this year, the influx of retail investors from multiple countries even triggered localized shortages of gold bars. By the second quarter, however, global sales of gold bars and coins fell quarter-on-quarter to 307 tons, and gold ETF holdings also contracted. Although net long positions in gold futures among non-commercial traders dropped from 25 million ounces at the start of the year to 15 million ounces, the overall level remains above the bottom areas seen at the end of previous long-cycle corrections. Notably, global central banks remain steadfast buyers. Their gold purchases of 345 tons in the first half of the year, while slowing, are still above the historical average, driven by long-term considerations to hedge geopolitical risks, diversify investment portfolios, and guard against inflation.
The core support for the long-term logic of precious metals still lies in concerns over U.S. macroeconomic fundamentals. Currently, the U.S. federal government's debt has surpassed the $40 trillion mark, far exceeding its economic scale, with the budget deficit continuing to expand. Against the backdrop of major global economies facing high debt levels and a lack of effective fiscal consolidation measures, market concerns over debt sustainability and the depreciation of currency purchasing power are hard to eliminate. Meanwhile, the U.S. core Personal Consumption Expenditures price index in July remained at a high of 3.3%, indicating persistent inflation stickiness. Recent statements from senior Federal Reserve officials have also leaned cautious; while emphasizing economic resilience, they reiterated the necessity of controlling inflation, failing to provide the market with clear guidance on monetary easing.
Geopolitical uncertainties similarly provide a floor for gold prices. The standoff between the U.S. and Iran has evolved into a protracted struggle. Although both sides have discussed frameworks such as temporary shipping corridors, substantive solutions remain elusive. This prolonged stalemate prevents safe-haven funds from easily exiting the precious metals market.
From a market performance perspective, after a rapid rebound in the early stage, both gold and silver prices are facing short-term profit-taking pressure. Spot gold is currently oscillating around $4,424.90 per ounce, while spot silver, after hitting a double-top resistance at $67.47 per ounce, has retreated to the $66.28 per ounce level. With the Federal Reserve's policy path remaining ambiguous and the geopolitical situation unresolved, the precious metals market is expected to maintain high volatility, as funds continue to reprice inflation and debt risks.
