Gold and silver still lack ETF buying, but there is rebound potential from 2H26 to 2027 if the Fed avoids rate hikes

Overview

This report discusses the price outlook for gold and silver in the absence of ETF buying. The core view is that gold lacks near-term directional conviction, but the recovery in central bank gold buying, a renewed allocation by macro capital, and the potential return of ETF inflows in the future tilt risk-reward to the upside; silver has recently lagged gold, mainly dragged down by weak industrial, solar, and jewellery demand, but if ETF inflows return or silver starts following copper prices again, its rebound beta could exceed that of gold.

Core views

First, ETFs are the key marginal buyers for gold and silver: in 2025, ETFs accounted for about 20% of gold demand and 15% of silver demand, but outflows emerged in 2026 amid the Middle East conflict and rate-hike expectations. Second, gold's fundamental support is improving, with central bank gold buying accelerating in China, Poland, and Uzbekistan, while Turkey's sales are slowing. Third, silver's industrial exposure is a near-term drag, as weaker solar and jewellery demand has led to a sharp decline in its correlation with copper. Fourth, if U.S. inflation continues to cool, the Fed holds rates steady and pivots to rate cuts in 2027, ETFs may re-engage around Q4, driving both precious metals higher.

Analysis framework

The report uses a framework combining the macro rate path, ETF fund flows, central bank gold buying, futures positioning, technicals, and end demand to assess the marginal supply-demand changes and price elasticity of gold and silver separately. For gold, the focus is on central bank demand, ETF flows, COMEX non-commercial positioning, and the 200-day moving average; for silver, the focus is on its correlation with gold and copper, solar silver demand, jewellery demand, and changes in ETF holdings.

Methodology notes

• Macro frameworkReal rates and Fed path analysis

  Rate expectations determine the timing of ETF re-engagement

  Demand for gold and silver ETFs is sensitive to the Fed's rate path, real yields, and the U.S. dollar; the report argues that the market needs greater confidence that the Fed will at least hold rates steady and move toward future cuts before ETFs can return meaningfully.

• Supply-demand frameworkBreakdown of central bank gold buying and ETF demand

  Separation of structural floor support and marginal buying

  Central bank gold buying is more structural and may not be fully driven by prices and monetary policy; ETFs, by contrast, are the more cyclical marginal buyers that determine whether gold and silver can regain upside momentum.

• Industrial demand frameworkSilver industrial demand and substitution analysis

  Solar silver thrifting and substitution suppress silver demand

  The report treats solar, jewellery, and industrial uses as key variables for silver demand, noting that high prices and volatility are driving silver thrift, substitution, and consumption shifts, weakening silver's traditional correlation with copper.

• Market behavior frameworkCOMEX positioning and technical trend

  Macro capital accumulation coexists with CTA selling pressure

  The rebound in COMEX gold non-commercial net longs indicates renewed macro participation, but gold remains below its 200-day moving average and has formed a 'death cross,' which may lead CTAs to sell into strength and cap near-term upside.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Gold

  Core research asset

  Strengths

  Recovery in central bank gold buying, accelerated purchases from China and others, renewed accumulation by macro capital, and room for ETF inflows to return if the rate path turns dovish.

  Weaknesses

  ETFs are still absent, with recent outflows from North American funds; price remains below the 200-day moving average and has formed a 'death cross,' so CTAs may sell into strength.

  Comparison

  Relative to silver, gold has lower exposure to industrial demand, and central bank demand provides stronger downside support, though near-term upside beta may be lower.

  Risks

  An escalation in the Middle East conflict pushes oil prices and inflation expectations higher, causing the market to reprice rate hikes; ETFs fail to return for an extended period; technical pressure persists.

• Silver

  High-beta precious metal and industrial metal cross-asset

  Strengths

  It has fallen more than gold, the gold-silver ratio has returned to 70x, and if ETF inflows return or its correlation with copper re-emerges, rebound beta could be higher.

  Weaknesses

  Weak solar and jewellery demand, with silver thrift and copper substitution suppressing demand; COMEX positioning remains subdued and investors have not yet clearly returned.

  Comparison

  Relative to gold, silver has higher forecast upside but also greater fundamental headwinds, with more sensitivity to the industrial cycle and linkage to copper prices.

  Risks

  Fed rate hikes, rising real yields, further declines in solar demand, weaker industrial growth, and continued ETF outflows.

• Precious Metals ETFs

  Marginal demand driver for gold and silver

  Strengths

  Once the rate path becomes clearer and rate-cut expectations rise again, ETFs could once more become a major source of incremental buying.

  Weaknesses

  They are currently affected by rate-hike concerns, real yields, and the U.S. dollar, with North America, especially U.S.-listed funds, seeing notable outflows.

  Comparison

  ETF flows are more cyclical than central bank gold buying and more sensitive to price and rate expectations, making them the key variable for short-term price direction.

  Risks

  The market continues to price in rate hikes, inflation data remains choppy, and geopolitical conflict lifts oil prices, all of which could delay ETF re-engagement.

• Copper

  Related asset for silver and benchmark for industrial demand

  Strengths

  Copper is supported by grid investment, data centers, and potential pre-tariff restocking demand; if it strengthens, it may help silver recover part of its correlation.

  Weaknesses

  Silver's correlation with copper has currently fallen to 0%, indicating that silver is not fully benefiting from copper's demand story.

  Comparison

  Copper's industrial-demand support is stronger than silver's, while silver is currently more affected by precious-metals macro logic and weakness in solar demand.

  Risks

  If copper prices weaken or silver's correlation with copper does not recover, silver's high-beta upside thesis will be undermined.

Key data

• Gold 4Q26 forecast price$4,450/ozMorgan Stanley forecast; the report says this implies about 11% upside by year-end.
• Silver 4Q26 forecast price$65.40/ozMorgan Stanley forecast; the report says this implies about 16% upside by year-end.
• ETF share of gold demand in 202520%The report says ETFs were an important component of gold demand in 2025.
• ETF share of silver demand in 202515%The report says ETFs were also an important marginal source of silver demand.
• China central bank gold buying year-to-date40.1 tonnesAs of the period covered in the report, this had already exceeded the full-year 2025 total of 25.8 tonnes.
• Poland gold buying year-to-date63.6 tonnesPace is ahead of the roughly 100 tonnes purchased in all of 2025 on a time-adjusted basis.
• Uzbekistan gold buying year-to-date32.7 tonnesAbove 7.8 tonnes in 2025.
• Global identifiable gold purchases84.4 tonnes YTD to MayDown 30% year over year versus the same period in 2025, but the report believes there is still room for recovery in 2H.
• North America gold ETF outflows in June42 tonnesNorth America has been the main driver of recent gold ETF outflows.
• North America gold ETF net sales in 1H60.5 tonnesThe report views U.S.-listed funds as the marginal capital pool for gold ETFs.
• Asia gold ETF net buying in 1H69.7 tonnesDue to strong inflows early in the year, Asia remains a net buyer year to date.
• COMEX gold non-commercial net longs194k lots as of 15 JulyUp 34k lots from the prior period, driven by both new longs and short covering.
• Silver-gold correlation79% in 1H26 vs 98% in 2H25Shows that the linkage between silver and gold has weakened.
• Silver-copper correlation0% currently vs 95% in 2H25Weaker solar and industrial demand has broken silver's traditional correlation with copper.
• Solar share of silver demand17% in 2025Above 7.4% in 2019, but subsequent demand risks are skewed to the downside.
• Change in solar silver demand-6% YoY in 2025; Silver Institute forecasts -19% in 2026Affected by slower solar output growth, silver thrifting, and substitution.
• China solar cell productiondown 2% YTDThe report says China's solar installations are down 70% from a high base.
• Silver ETF holdings784 Moz in 2026 vs peak around 870 Moz in late 2025A decline of about 10%, larger than the roughly 5% decline in gold ETFs from their peak.
• Gold-silver ratio70xHas rebounded from a late-January low of 46x to near its long-term estimated level.

Impact & implications

For asset allocation, gold looks more like a precious-metal asset supported by central bank buying and macro safe-haven logic; if rate expectations turn dovish, returning ETF inflows could bring significant upside. Silver, while offering higher beta, must in the near term contend with simultaneous pressure from macro rates, industrial demand, and solar substitution. The report leans toward both having upside, but silver's upside depends more on ETF inflows returning, correlation with copper being restored, and industrial demand stabilizing.

Risks

• The Fed re-enters a rate-hike cycle, pushing up real yields and suppressing gold and silver ETF demand.
• A renewed escalation in the Middle East conflict pushes up oil prices and inflation concerns, causing the market to reprice a more hawkish rate path.
• ETF funds continue to flow out, especially if North American and U.S.-listed gold funds fail to become marginal buyers again.
• Gold technicals remain weak, with the price below the 200-day moving average and a 'death cross' in place, which may trigger CTAs to keep selling rallies.
• Solar demand for silver declines further, while silver thrifting, copper substitution, and slower installations in China continue to weigh on industrial demand.
• Silver jewellery demand remains under pressure, with consumers and brands shifting to other precious metals or materials.
• A single month of CPI improvement is not enough to confirm the inflation trend, and any renewed volatility in subsequent data would delay ETF inflows returning.

What to watch

• Whether the Fed avoids rate hikes this year and whether the market begins to price 2027 rate cuts more clearly.
• U.S. CPI, inflation expectations, real yields, and the U.S. dollar trend.
• North American gold ETF flows, especially whether U.S.-listed funds shift from net outflows to net inflows.
• Whether central bank gold buying by China, Poland, Uzbekistan, and others continues, and whether sales by Turkey and Russia keep slowing.
• Whether gold can reclaim the 200-day moving average to ease selling pressure from CTAs and trend-following funds.
• Whether COMEX gold and silver non-commercial net positioning continues to improve.
• The impact of changes in China's solar cell production, installations, exports, and VAT rebate on silver demand.
• Whether silver's correlation with copper recovers, and whether copper prices continue to be supported by grids, data centers, and inventory demand.