After the Pullback: What Happens Next for Gold and Silver?

Precious Metals Performance

Precious metals markets have entered a new phase in early 2026, characterised by heightened volatility and rapid shifts in investor positioning. Following a parabolic surge to record highs to start 2026, markets experienced a sharp deleveraging event, largely driven by a washout of speculative excess rather than a deterioration in underlying fundamentals.

After rallying sharply through January and briefly trading well above the USD $5,500 per troy ounce (oz) level, gold has since pulled back and continues to solidate around the USD $5,000oz price level. Silver continues to mirror gold’s volatility, demonstrating even sharper retracements following outsized gains earlier in the year.

At the time of writing, gold is currently trading at USD $4980oz, with silver at $77.5oz, representing a year-to-date return of 15.4% and 8.6% respectively.

In Australian dollar terms, returns continue to be more muted, with gold rising 9.5%. The increase in the value of the Australian dollar, which gained 5.6% vs. the greenback since the beginning of 2026 to 0.7070, was responsible for the lower AUD based precious metal returns.

The AUD recently hit a three-year high vs the USD driven by sticky inflationary pressures and a hawkish stance by the RBA, who recently increased interest rates by 25 basis points after inflation jumped to 3.8% by end 2025 (CBA).

How Is the Current Macroeconomic Backdrop Influencing Prices?

A recent interview with James Steel, Chief Precious Metals Analyst at HSBC, highlighted the erosion of traditional macro relationships that have historically guided gold’s price behaviour. He underlined how the long-standing correlation between gold and real interest rates in the US has weakened considerably since 2022.

As illustrated in Figure 1; pre-2022, gold and the US 10Y real yield had a strong inverse correlation dating back to the removal of the gold standard in 1971. Post-2022, this relationship has broken, with gold far less sensitive to real rates and continuing to rise despite periods of stable or even rising real yields. This breakdown coincided with elevated geopolitical risks, surging retail investment and robust central bank purchases.

Figure 1

This shift has become increasingly apparent in recent weeks, with the US 10-year real yield plunging approximately 20 basis points from its mid-January peak of 1.97% to a recent low of 1.77%, with gold—although volatile—largely unchanged over the same period.

This shift reflects a market increasingly driven by structural and behavioural forces, rather than purely cyclical macro indicators. Investor psychology has also evolved.

Gold is no longer viewed solely as an inflation hedge or tactical investment, but increasingly as a hedge against record levels of government fiscal debt, geopolitical fragmentation and systemic risk.

This evolving dynamic suggests that heightened volatility is not a temporary anomaly following record prices, but rather a defining characteristic of the current bull market and one that is likely to persist throughout 2026.

What Can We Expect Next?

At ABC Bullion, we continue to hold the view that neither the recent volatility nor the potential for another short-term pullback in prices should distract or discourage precious metal investors.

The long-term bullish thesis for precious metals is firmly intact, underpinned by the same fundamental drivers that propelled prices to record levels throughout 2025. These include robust central bank demand and sustained retail investor demand via ETF flows, as well as sticky inflationary pressures, and the potential for a significant correction in stretched equity markets.

Given this backdrop, the broader outlook remains constructive and should continue to see the precious metals sector attract further investment across 2026 and beyond.

Thank you for choosing ABC Bullion.

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Market and Business Analyst, ABC Bullion

^{Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.}