May 2026

Weekly round -up for Stonex Bullion

By Rhona O'Connell, Head of Market Analysis

Probe into the Fed has been dropped; clears the way for Warsh to take over at the Fed

In terms of market activity there is very little change from when we last wrote a fortnight ago. Gold and silver continue to trade in very narrow ranges as they watch the evolution of the geopolitical background and many market stakeholders still prefer to stand aside and wait for more clarity. As before Silver has largely been following gold and gold itself has been concentrating on the bond yields and of course geopolitical developments It is axiomatic that all of these are bound up together, but as one of our dealers put It recently, gold is looking at yields and headlines, which sums up the situation nicely. As we write this morning both are towards the top end of the prevailing range but as yet neither has broken out and once again the moving averages are guiding activity to a degree.

These short term charts show how tightly-bound the price action has been;

Gold, between three key moving averages

Source; Bloomberg, StoneX

Silver; as usual, wider ranges than gold, but still tight

Gold moved higher as the end of last week on renewed hopes for a settlement in the Gulf although the latest comments from President Trump that the fresh Iran proposals are “totally unacceptable” has, not surprisingly generated A small correction.

As we noted a fortnight ago extended periods of very narrow range trading do tend to lead to a buildup of pressure and generate a breakout in one direction or the other. This time is not much different from other occasions; since the markets are so quiet it is possible that we will see an outbreak of pent up demand when the background environment looks more settled, but by the same token it is likely also to see some regional selling into any fresh price strength. The fact that the moving averages have been able to repel upward attacks and that inflationary fears turn into negative movements on the back of rising bond yields still leads us to think that the bull case for gold, while tangible, is not wholly convincing.

Gold and the 2Y, 10Y yields;

In the background the Chinese market for jewellery remains under a cloud although bar and coin activity appears still to be robust; interestingly the renminbi was fixed this morning 11th May at a three-year high ahead of the summit meeting between Presidents XI and Trump at the end of this week, which will be a focus of considerable international attention especially as Iran is expected to be raised as an important issue. On mainland China this morning the local Shanghai gold price Is at a 1% premium to London. This essentially is flat but prices had been at a small discount so this does at least suggest a degree of stabilisation in the local market.

Meanwhile in India the gold price has gone to a discount to international markets as demand remains sidelined with caution exacerbated by the fact that there are still some customs and tariff issues and at the moment only one house holds an operating import licence.

In the wider markets the prolongation of the Gulf conflict is of course raising inflation expectations and there is talk now that the next move from the Fed could well be a hike in rates later this year If needs be. With the housing market still under pressure and the labour market's still looking relatively soft this fear is probably overdone and the swaps markets are still discounting a rate cut in the final quarter of this year. Kevin Warsh is expected to take a similar line to Jay Powell, at least in terms of keeping the Fed meetings data dependent and at present with core PCE at 3.4%,there is little likelihood of any cuts in the near future, although with the labour market still relatively soft and the housing market still In trouble, debates in the FM in the FOMC meetings this year are likely to be lively.

On COMEX the caution in the professional market Is apparent with outright longs dropping from 390t in late April to 380t at the end of the month and gaining just 4t in the following week to stand at 384t. Over the same period shorts went from 94t to 101t at month-end, then there was some covering in the week to last Tuesday leaving the net long at 293t. The outright long silver position has been more interesting, easing in the middle of April but gaining almost 400t over the past fortnight but in the past week’s report they had jumped to 755t, the highest since early March. Shorts have been variable with no clear trend.

The World Gold Council Figures to the end of April show gold ETFs at 4137t, a gain of 108t with North American holdings actually dropping by 10t, Europe rising by 19 but a substantial gain of 90t In Asia which represents a 22% increase over the year as a whole. Subsequent numbers from Bloomberg which are not as complete as those from the WGC show mixed activity for a net slippage of just 4t over the period . Silver ETFs were on the defensive for much of April, losing 138t or just 1% of the end March holdings. Since then there has been some cautious buying interest for a net gain of 39t so far in May.

Gold COMEX positioning, Money Managers (t)