Aug 2026

Weekly round-up for Stonex Bullion

By Rhona O'Connell, Head of Market Analysis

It’s the Lobster Quadrille… “will you, won’t you…”

Outlook: continued downside gold and silver risk lurking in the background; Warsh lets the markets do the talking

Readers of Lewis Carroll will recognise the above reference. It comes from Alice’s Adventures in Wonderland with the Mock Turtle and the Gryphon explain the dance, which involves a variety of sea creatures and in two of the verses the refrain is

“Will you, won’t you, will you won’t you, will you join the dance?

Will you, wont you, will you won’t you, won’t you join the dance?”

Matters in the Gulf can hardly be described as a dance, but the constant changing of position put me in mind of those words. The markets are continuing to react to fresh developments, but the amplitude of reactions is generally fading somewhat, and the northern hemisphere summer season is upon us, also keeping something of a lid on activity. Ordinarily, thin conditions would add to volatility, but gold remains tightly constrained .between $4,000 and $4,200; while siler is hovering below $60. In both cases the technical chart constructions are negative, but in each case the 10-day is close to crossing above the 20-day, which could help to offer some support.

In the physical markets, the Middle East and India are both sluggish with gold flowing back to refiners; silver in India is still sluggish(India is the world’s largest consumer of silver jewellery and silverware with 41% global market share of the two sectors combined and 59% of silverware in isolation, which is important for wedding gifts). This year’s monsoon has been mixed; not as bad as had been feared when El Niño started to strengthen, but it now looks as if it is coming in at about 10% below the average, after a slightly late start. This will affect gold and silver domestic offtake, as the proceeds from crop sales are a key driver of domestic demand from the agrarian community, which makes up 40% of total – when families and dependents are taken into account the farming industry affects 60% of the population. Furthermore we are still in the Chaturnas period, which ends on 21^st November and which is regarded as inauspicious for weddings and other significant ceremonies. South-east Asia is quiet, while Chinese buyers are appearing into price dips.

Meanwhile over at the Fed Kevin Warsh gave little away in his press conference, which was as expected, as he prefers to let the markets do the talking. He got the “family fight” that he was hoping for with three members of the 12-strong Committee voting for a hike and going public on the subject thereafter. Bond yields are continuing to track higher as the markets remain concerned about the medium-term inflation outlook on the back of the Gulf War, the legacy of higher energy prices and disrupted supply chains. It does look as if the tariff effect is starting to fade, although some manufactures are reportedly preparing to pass their increased costs through to the end of the chain as opposed to living with compressed margins. Follow this link to access last week’s commentary on the Fed, plus the back catalogue of StoneX precious metals analyses.

US five-year and 30-year yield

We ran this following paragraph last week but think it is worth keeping this week also.

In the background, with the S.122 tariffs expiring last week, the S.301 tariffs now come into play. Including 60 countries that the US Administration believes have been benefiting from “forced labour”; there is a 10% tariff on countries that are deemed to have taken “meaningful steps” towards forced labour prohibition. These include Canada, Ecuador, the European Union, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, Taiwan, and the United Kingdom; the remaining 45 will face tariffs of 12.5% while there has been a separate investigation into Brazil (digital trade, intellectual property and deforestation) and 25% has been proposed, on top of the 12.5% forced labour rate. Exemptions are similar to those under S.122 along with goods already subject to S.232 tariffs (steel, aluminium, autos and semiconductors). It appears that a number of manufacturers in the States are now starting to pass through their increased costs to the consumer, having previously been prepared to accept reduced margins so this, too, will likely provide some degree of inflationary pressure.

There is also a separate investigation into structural overcapacity in manufacturing in electronics, semiconductors, batteries and machinery; findings not yet published.

We maintain our view on gold and silver, in that narrow ranges remain the order of the day and we continue to believe that the downside is marginally more likely than sustained rallies.

Energy eases on potential progress in the Gulf

Source: Bloomberg, StoneX

Meanwhile the 10-year yield has eased over the weekend with the fall in oil, but it is nonetheless higher than at end February, currently standing at 4.3%. This still provides a headwind for gold and, with its industrial bias, for silver.

Gold, just above the 10D and 20D moving averages (at $4,052 and $4072 respectively)

Silver’s moving averages are all inverted also

Source; Bloomberg, StoneX

The latest CFTC gold figures show a contraction in activity in the week to 21^st July (summer doldrums plus some likely frustration at the lack of price direction) with gold trading between $3,992 and$4,166 but retreating to close at $4,137. Silver took on a bearish tone, again a combination of summer slowdown and concern over the medium-term fundamental outlook, with longs dropping by 43t or 2% but shorts rising by 265t or 27% to take the net long to 1,522t, the lowest since mid-April.

Among the Exchange Traded Funds, the latest figures from the World Gold Council run to 24^th July and show a year-to-date gain of just 32t, to 4,057t. Falls of 56t (3%) in North America, a gain of 18t in Europe (1%) and of 71t (16%) in Asia. In the week to 24^th matters were more bullish, with North America adding 12t, Europe 2t and Asia 4t.

The Bloomberg figures to last Friday, however, which are not as comprehensive as those from the World Gold Council, show a mixed bag, with a gain of 2t overall. While this implies a net 34t gain over the year, it also represents a fall of 84t from the mid-April high of 4,143t. Silver ETFs are reported at 24,4763t, a drop of 2,345t in the year to date, with small net redemptions last week amounting to 49t.

Gold COMEX positioning, Money Managers (t)