Podcast: Play in new window
Gold and silver take another slide this week, with gold dropping below the $4,000 level and silver moving just below $60. This follows a strengthening in the U.S. dollar and a hawkish Federal Reserve outlook. But when you step back from the daily ticks, the picture looks far less alarming. This is a seasonal, momentum-driven breather inside a bull market that is still very much intact — and possibly one of the better buying setups we’ve seen this year.
Let’s take a look at where prices stand as of Wednesday, June 24:
The price of gold is down 7.5% since our last recording, breaching below that lucky $4,000 level and sitting at $3,998 as of recording.
The price of silver is down 17%, falling from about $69 last week to $57.50. That’s a big drop, but keep it in perspective — silver is still roughly twice what it was a little over a year ago.
Platinum is down about 10%, sitting at $1,575.
Palladium is down about 12%, currently at $1,160.
Looking over at the paper markets…
The S&P 500 is down another 2% to 7,358, continuing its slide of the last couple of weeks.
Interestingly, the Dow held up better and was roughly flat to higher on the week, though the Dow transports have continued to languish. That divergence suggests equities may be running out of steam and getting ready for a breather of their own.
The U.S. Dollar Index is up about 1.5% to 101.55, now a point and a half above the 100 level and continuing its strong climb.
Dollar Rises Amid Overall Weakness
This was a week where interest rates stayed the same, yet nearly everything else sold off. The driver was the dollar.
With the new Fed chair sounding like they may be more hawkish going forward than the President had hoped, and some genuinely combative opinions inside the Fed about where dollar and rate policy should head, the greenback pushed well above 100. When the dollar climbs like this, gold and silver tend to feel it — and they did. The metals took the brunt, but the selloff bled into equities too.
Demand Still Strong in the East
Here’s the strange part: the price weakness is happening against a backdrop of enormous physical demand. China imported somewhere around 160–170 tons of gold last month — its biggest month in a couple of years. It has brought in nearly 700 tons so far this year. Yet that demand simply isn’t showing up in the price.
Part of the reason is what’s happening in the paper market. Open interest in U.S. gold futures — the number of open contracts — has collapsed to almost nothing. We were sitting near zero just a couple of days ago, which is highly unusual. ETF interest is similarly thin in the West while remaining strong out East. We’ve seen this East–West split before: the physical demand is real, but it isn’t dictating the price right now. That disconnect can persist longer than it seems like it should.
Momentum is Missing
Gold has now visited the $3,900–$4,100 zone four times, and each low has come in a touch lower while each recovery has topped out a touch lower than the one before. That’s momentum — it’s just pointing the wrong way for now.
Zoom out and this fits a textbook correction. Gold climbed from roughly $3,300 last August up to about $4,300, stalled in a months-long trading range (roughly $3,900 to the low-$4,300s through last fall), then powered all the way up past $5,600. That’s two big steps forward. What we’re watching now is one step back, working price down through that old range. The next “line in the sand” worth watching is around $3,800 — we’ll see if it holds.
What we want to see from here is consolidation: drops that bottom a little higher and rallies that peak a little lower, squeezing price into a pennant or bull-flag formation. That kind of base-building is what sets up the next leg higher. We’re not there yet — but it’s a healthy, normal phase, not a reason to abandon core holdings.
A Thin Market Cuts Both Ways
There’s an argument making the rounds (we saw a thoughtful version of it over at Goldfix) that with so little open interest and very little short interest, it wouldn’t take much to move these markets hard to the upside. For example, a five-million-ounce gold order could send price rocketing back toward $4,800 simply because there’s no breadth in the market to absorb it. It’s hard to feel bullish at a moment like this, which is precisely why a sharp reversal would catch most people by surprise.
And remember who has the deep enough pockets to pull orders that size: China, India, and the United States, which was itself a major silver buyer last year. At these lower prices, those players are buyers, not sellers. China is already back buying silver. The big participants who can get the ball rolling downhill are the ones leaning the other way.
Let The Ratio Do The Work
When the dollar price whips around like this, ratio trading lets you take the dollar out of the discussion entirely. You stop worrying about the price of gold or silver and start focusing on how many ounces of one you can get for the other.
The gold-to-silver ratio sits near 69.5 to 1 as we record, up from a little over 67 last week. After gold hit ~$5,600 and silver ~$120 earlier this year, the ratio snapped back to around 72.5 intraday in February. We could see it push toward 75:1 or even 80:1 before it reverses back down — and that reversal is the move we’re watching most closely for swap opportunities.
Silver, meanwhile, is closing in on the big round $50 number. People fall in love with zeros, so don’t be shocked if someone tries to press it down toward $50 to test for buy orders — but there should be real buying interest down there.
Above all, keep the timeframe honest. Even if silver round-trips to $50, you’re still looking at something like 20–30% annualized returns since 2020 in a worst case. This is short-term noise on top of a long-term bull market. Markets breathe in and breathe out, and this is a breathe-out. June is historically the weakest month of the year for gold — which is exactly why July so often sets up as a strong buying window. The best time to act is usually when nobody else cares. China clearly already does.
Here to Help
Wondering how to take advantage of this pullback in precious metals? The team at McAlvany Precious Metals is happy to speak with you about your goals on a no-obligation, complimentary consultation — whether that’s establishing a position, averaging down on an existing one, or putting a ratio trade to work inside an IRA. Reach out to us at 800-525-9556.
