Consecutive Breaks Below Key Levels, Can Silver and Gold Prices "Hold" Any Longer?

International gold and silver prices continue to decline.

On March 23, after the international gold and silver markets opened, the downward trend persisted. According to futures daily reporters, as traditional safe-haven assets, gold and silver prices have fallen for the fourth consecutive week.

As of the time of writing, London gold dropped 7.73%, to $4,149.16 per ounce; London silver fell 8.6%, to $62.03 per ounce.

Affected by the decline in international gold and silver prices, the main Shanghai Gold futures contract 2604 repeatedly broke through key technical levels at 1050 yuan/gram, 1030 yuan/gram, and 1000 yuan/gram, showing a downward breakout trend. By the close of trading, this contract had fallen 8.62%, to 940 yuan/gram.

“The escalation of Middle East conflicts is a major reason for the recent decline in precious metals prices,” said Wang Luchen, a researcher at Galaxy Futures for precious metals. Last weekend, the U.S. threatened to “strike Iran’s energy facilities,” and Iran responded strongly, reigniting market panic. However, unlike previous safe-haven-driven gold price increases, this round of gold and silver prices is mainly dragged down by liquidity pressures.

“Energy prices surged significantly, increasing market concerns about future inflation. Last week, Federal Reserve officials generally shifted to a ‘hawkish’ stance, while the European Central Bank and Bank of England also tightened their monetary policies. Expectations of rate hikes and tightening liquidity have put short-term pressure on gold and silver prices,” Wang Luchen said.

“From a medium- to long-term perspective, gold still has investment value,” said Gao Bo, an investment analyst at Galaxy Futures. The continued central bank gold purchases, the trend of de-dollarization, and geopolitical uncertainties will still provide underlying support for gold prices. Against the backdrop of high U.S. fiscal deficits, long-term investment in gold remains valuable. If future oil prices fall, inflation expectations ease, and the Federal Reserve shifts back to a loose policy, precious metal prices are expected to recover.