During the Asian trading session on Tuesday, spot gold extended its previous day's losses, currently down approximately 1% to around $4,120 per ounce. Spot silver fell about 2.4%, trading near $60.50 per ounce.
Despite gold not yet breaking above the initial resistance above $4,200, Ole Hansen, Head of Commodity Strategy at Saxo Bank, believes the most intense selling pressure during the multi-month correction may have passed.
For silver, a key support level in the mid-$50s held firm, leading to a rebound above $60, though it also faces significant technical and psychological repair work.
The Transition from Liquidation to Consolidation
In a precious metals report released on Monday, Saxo Bank's Ole Hansen presented a core assessment: the price action in the gold market is shifting from "liquidation" to "consolidation and basing."
The significance of this shift should not be underestimated. Over the past several months, the gold price retreated consistently from its January peak, with a maximum drawdown of roughly $1,650 per ounce (about 28%), plunging the market into a phase of panic selling. Currently, "the sector has shifted from being aggressively bought to being selectively accumulated"—a sign that the underlying structure of market sentiment is changing.
Hansen noted that gold's next direction will hinge on whether macro conditions continue to ease or turn unfavorable again. This characterization accurately summarizes gold's current "wait-and-see" state: the fiercest selling is likely over, but new buying forces have not yet fully taken control of the market.
Macro-Policy Support: A Dual Tailwind from Jobs Data and Waller's Comments
Gold's recent stabilization has benefited from marginal improvements in the macroeconomic backdrop, evident in two key areas.
First, jobs data have weakened expectations for aggressive rate hikes. The addition of only 57,000 non-farm payrolls in June, a figure well below forecasts, led to a significant scaling back of the market's aggressive predictions for rate hikes this year. While the market still anticipates the Federal Reserve will act, the core variable of "the number and magnitude of hikes" has undergone a substantive change.
Second, comments from Fed Governor Christopher Waller provided room for speculation about a policy pivot. Waller reaffirmed the commitment to price stability and the goal of returning inflation to target, but also explicitly stated that inflation risks have eased in recent weeks since he assumed his role. This statement delivered a marginally dovish signal.
Hansen stated that against a backdrop of persistently easing inflation pressures and plunging energy prices, a Fed rate hike this year is "illogical." Should the market broadly accept this view, the US dollar would likely weaken as the elevated level of long positions is squeezed, and short-term bond yields would revert towards the federal funds rate. This implies gold would receive a systemic, macro-level tailwind.
Technical Signals: Building a Base Takes Time
Despite the improving fundamental backdrop, Hansen emphasized that gold still has substantial technical repair work ahead—the current price remains about 26% below the January high.
Key technical junctures are as follows:
Support below $4,000 has held, representing the most critical defensive line for bulls during this correction.
However, the rebound near $4,200 encountered fresh selling pressure. This indicates some investors are still using rallies to reduce exposure—a typical price behavior following a deep correction, which also explains why building a sustainable market bottom requires time.
Key resistance ahead lies at:
The 200-day moving average (around $4,485 per ounce) — this is the first major hurdle gold bulls need to overcome.
Silver: Dual Resilience Bolstered by Industrial Attributes
While silver currently trades above $60 per ounce, the resilience of its base is more noteworthy.
The "key support" in the mid-$50s successfully halted the decline—this technical level withstood the test during this correction.
The subsequent rebound back above $60 demonstrates the metal's elasticity.
Hansen highlighted silver's dual nature: on one hand, it possesses gold-like macro sensitivity (to interest rates, the dollar, and risk sentiment); on the other, it has a tighter fundamental backdrop—years of supply deficits and steadily growing industrial demand provide structural support.
Yet this characteristic is a double-edged sword: the silver market is far smaller than gold's, making it more sensitive to fund flows. This means silver holds strong appeal for trend-following investors when conditions improve, but also faces more severe liquidation risks when sentiment reverses. For silver, the current task also involves both "technical and psychological repair," but its structural fundamental support could grant it greater upward elasticity than gold once a bottom is confirmed.
Outlook: Three Key Variables to Watch During the Basing Phase
In summary, gold and silver are in a critical phase of transitioning from "liquidation" to "consolidation and basing." The successful completion of this transition depends on the evolution of three key variables:
First, clarification of the Federal Reserve's policy path. If inflation data over the coming weeks continues to recede, market pricing for a rate hike this year will weaken further from the current "still expected" stance. A decline in the dollar and yields would provide the macro driver for gold to break through the $4,200-$4,500 resistance zone.
Second, validation from ETF flow trends. Whether long-term capital begins flowing back into gold ETFs will be a crucial indicator to verify if the shift "from liquidation to accumulation" is taking hold.
Third, the pace of overcoming technical resistance. Digesting selling pressure near $4,200 requires time. If price can trade time for space—repeatedly testing the $4,000-$4,200 range without breaking to new lows—the credibility of the bottoming structure will steadily increase. Conversely, if a rapid surge to $4,200 encounters another wave of heavy selling, the basing process could prove more protracted than expected.
Hansen's conclusion provides a clear framework for the current market positioning: the most violent selling is likely over, but a sustainable bottom requires time to build. With the macro backdrop improving but technical confirmation still pending, gold and silver are in a "phase of gathering strength for directional choice"—exercising patience for confirming signals is a more prudent approach than hastily calling a trend reversal.
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