Gold Price Forecast: Despite muted follow-through, gold’s breakout from last week remains intact, with consolidation inside a bullish pennant suggesting rising odds of an eventual continuation toward new record highs.
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Gold Move
Gold (XAU/USD) pulled back to a low of $3,320 on Tuesday, as it tested support around the 50-Day MA, now at $3,323. This followed a four-line upside breakout last Friday when the combination of a 20-Day MA, 50-Day MA, an AVWAP line, and a short downtrend line (dashed), were exceeded. The breakout was confirmed with a daily close above the top of the range on Friday and again on Monday.
Also, an interim swing high at $3,365 was broken, reflecting strong demand. So far, the subsequent follow-through has been relatively muted. This may be due to gold remaining within a developing pennant consolidation pattern, which tends to dampen volatility.
Resistance And Support – Bullish
Tuesday’s low for the day was a successful test of support around the short downtrend line, AVWAP level, and the 50-Day MA. This is classic bullish behavior following an upside breakout. Prior resistance is tested as support. However, it is not yet clear that support will continue to be seen around the 50-Day line. A short-term sign of weakness will be indicated if it fails. Currently, the 50-Day MA is at $3,318. But the more significant lower rising trendline at the bottom of a bull pennant pattern and recent interim swing low at $3,272, should carry greater weight.
Volatility Contracting
The price of gold has been contracting recently as it moves closer to the apex of the pennant triangle. As it moves closer the likelihood of an upward breakout or pattern failure rises (below $3,275). Range compression can also be seen by the recent 20-Day MA (purple) converging with the 50-Day MA (orange). Given the larger bullish trend for gold, the expectation is for an eventual upside breakout.
That would happen on a rally above the top boundary line of the pattern initially, with a more significant breakout above the lower swing high at $3,451. An initial new record high for gold at $3,580 is derived from a rising ABCD pattern (purple) in development.
Bullish Above $3,370
A rally above Monday’s high will signal a short-term bullish reversal and confirmation of a higher swing high. That will put the top pennant trendline on a collision course with price. And it could be the beginning of the rally that breaks out of the pennant. Nonetheless, gold may also continue to consolidate inside the pennant formation before it is ready to break higher. That scenario must also be considered.
Silver investment surges during first half of 2025
Through the first half of 2025, inflows of silver into ETFs eclipsed the total for the entirety of 2024, reflecting a surge of silver investment demand.
The average annual price of silver rose 25 percent in H1. That was comparable to the 26 percent gain charted by gold.
Silver ETFs
Through the first six months of the year, 95 million ounces of silver flowed into ETFs globally. That pushed total fund holdings to 1.13 billion ounces, according to data compiled by the Silver Institute. That’s about 7 percent below the all-time high of 1.2 billion ounces hit in February 2021.
With the rising price of silver, the value of ETF holdings hit a series of all-time highs in June, exceeding $40 billion for the first time.
ETF inflows were relatively constant through the first five months of the year, and then surged in June, with more than half the gains coming in the final month of H1. It was the most significant monthly increase since the Reddit silver squeeze in early 2021.
Industrial Demand
It’s important to consider the impact of this ETF on a market that is already operating at a supply deficit. Silver demand outstripped new supply for the fourth straight year in 2024 as industrial demand set another record.
A supply deficit means the surging industrial demand must pull from the existing above-ground supply. With investment demand increasing, the two sectors will have to bid against each other, potentially driving the price higher.
ETFs are a convenient way for investors to play the silver market, but owning ETF shares is not the same as holding physical metal.
ETFs are relatively liquid. You can buy or sell an ETF with a couple of mouse clicks. You don’t have to worry about transporting or storing metal. In a nutshell, it allows investors to play the silver market without buying full ounces of metal at the spot price.
Since you are just buying a number in a computer, you can easily trade your ETF shares for another stock or cash whenever you want, even multiple times on the same day. Many speculative investors take advantage of this liquidity.
But while a silver ETF is a convenient way to play the price of silver on the market, you don’t actually possess any metal. You have paper. And you don’t know for sure that the fund has all the silver either, especially when the fund sees inflows. In such a scenario, there have sometimes been difficulties or delays in obtaining physical metal.
Retail investment was strong in Europe and Asia, but tepid in the U.S.
Retail silver investment in Europe began to rebound last year, and the momentum continued through the first half of 2025. However, the growth comes off a relatively low base, and investment volume still lags the elevated levels seen during the pandemic era.
Silver Institute
According to the Silver Institute, the European silver market has benefited from a slowdown in secondary market liquidation, and this has lifted demand for newly minted bars and coins.
India was the primary driver behind strong silver investment in Asia. The Indian retail market posted a strong 7 percent year-over-year gain in H1. According to the Silver Institute, this reflects “strong price expectations.”
In contrast, investors in the U.S. have taken advantage of higher prices to sell silver. According to the Silver Institute, retail demand in the U.S. fell around 30 percent through the first six months of 2024.
“This dynamic [selling], along with weak retail purchases, has weighed heavily on new bar and coin sales as some U.S. investors have been encouraged by multi-year high prices to book profits. Furthermore, the absence of a crisis in the U.S. (like the collapse of Silicon Valley Bank in 2023) has reduced safe-haven purchases.”
On the futures market, net longs on the CME were up 163 percent in H1. According to the Silver Institute, “Institutional investors have demonstrated a strong commitment to silver as a store of value for much of this year. This is reflected in the average net longs over the first six months of 2025, which achieved their highest level since the first half of 2021.”
The Silver Institute projects strong “two-way activity” in the silver coin and bar market as we move into the second half of 2025.
“One area of uncertainty, however, is how investors will react should the silver price eclipse US$40. The market could see a mixture of profit-taking by some, while other investors jump in, expecting further price gains.”
Based on both the technicals and the supply and demand dynamics, silver remains underpriced with significant upside. If U.S. investors hop on the bandwagon, it could drive another significant leg up.
