Metals Consolidate After Record Surge

Precious metal markets were in consolidation mode for most of May, with gold ending the month largely unchanged, after trading in a range between USD $3,400 and USD $3,100 per troy ounce (oz).

Silver was likewise steady over May as a whole, last trading just above USD $33oz, while in local currency terms it looks like ending the month just above AUD $52oz.

The sideways trade seen across the month represents a much-needed period of calm for both gold and silver, with both metals seeing one of their strongest starts to the year on record between January and late April for gold, with silver peaking earlier.

The surge in metal prices in early 2025 was driven by multiple factors, including renewed volatility in risk assets both leading into and in the aftermath of the Trump administration's “liberation day” tariff announcements, and the return to monetary easing by the US Federal Reserve.

While this period of calm for gold and silver may last a while longer, the outlook for precious metals remains positive, which can be seen through:

• The recent decline in the gold to silver ratio, which surged toward 104 in early May but has ended the month closer to 100.

• Price action in PGMs, most notably Platinum, which is up close to 15% in the past few weeks, having broken out of what appears to be a decade long base, with the price now back above USD $1,000oz.

The Platinum market in particular is generating more interest at present, with the market seeing supply deficits that have been in place for years and are set to remain in place until the end of the decade, as well as strong industrial and rising investment demand (see chart below).

The recent relative strength in platinum and silver, as well as the macroeconomic and monetary drivers for precious metals suggest there is still substantial upside in this market, with corrective periods like the one we are in now being used as buying opportunities by investors worldwide, including clients at ABC Bullion.

Asset Managers Talk Gold

2025 hasn’t just seen a surge in gold prices, with precious metals markets leading the way performance wise. It has also seen an array of ‘pro-gold’ research published by leading funds management and investment businesses, who are all now acknowledging the unique and valuable role precious metals can play in a diversified portfolio.

This includes global asset management firm BMO who published a detailed report titled “What Drives Gold, and Why Should Investors Own It?”.

BMO looked at multiple factors that can impact the gold price, and gold demand, including monetary easing cycles from the US Federal Reserve, while also noting that gold acts as an effective diversifier given its low correlation to equity markets.

They also noted that gold has substantially outperformed bonds since the onset of the COVID pandemic, while the desire by central banks to minimise USD exposure has, and likely will continue to drive nation state gold buying.

As a summation, the BMO reported noted that; “While some consolidation near-term is possible, gold remains positioned to continue outperforming against a backdrop of sticky inflation, recession risk, de-dollarization (reduced reliance on the U.S. dollar) and budget deficits. These tailwinds are also long-term themes, strengthening the strategic case for gold as investors look to hedge USD and fixed income exposures."

We couldn’t agree more, with recent developments in the futures market, where hedge funds turned net buyers for the first time in almost three months, also supporting current market dynamics.

Silver Headed Toward USD $40oz?

As most clients of ABC Bullion will know, silver almost always outperforms gold in precious metal bull markets, even if it is more volatile along the way.

‌Francisco Blanch, Head of Global Commodity and Derivatives Research at BOFA Securities, spoke about the current set up in precious metal markets, noting that while gold may consolidate for a while longer, they remain bullish, with a view it could head toward USD $4,000oz by H2 2026.

He also noted that silver looks promising from here, with investment demand, combined with an incredibly positive industrial outlook setting the market up for a continued rally, with a suggestion prices could head toward USD $40oz.

At current FX rates, that would equate to an AUD price above $60oz.

Jordan Eliseo
General Manager, ABC Bullion Australia

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