Gold and Silver Trade Sideways Amid Rising Yields and Geopolitical Tensions

The precious metals market remains highly volatile as gold and silver continue to trade within a relatively narrow range. Despite the Federal Reserve's decision to leave interest rates unchanged, the bond market is effectively tightening monetary conditions through rising long-term yields.

This environment creates conflicting forces for gold and silver, with rising real interest rates traditionally weighing on precious metals, while declining confidence in long-duration government bonds strengthens their appeal as an alternative store of value.

China's systematic accumulation of gold remains the dominant long-term narrative, with the country's central bank reportedly accumulating approximately 29,500 tonnes since 1949. China's true holdings could be closer to 5,200 tonnes, and estimates suggest it would require around 2,911 additional tonnes to match U.S. official central bank reserves in roughly five years at the current pace of purchases.

Despite the challenging macroeconomic backdrop, gold has shown remarkable resilience, with the actively traded August futures contract gaining 0.91% yesterday to close at US$4,065.50. BMO continues to forecast additional upside during the second half of 2026, targeting approximately US$4,750 by the fourth quarter once inflation concerns related to the conflict begin to ease.