Precious Metals Rally Gains Steam as Dollar Weakens and Macroeconomic Landscape Shifts
Thursday, June 12th 2025
Gold and silver are staging an impressive breakout, catching many market watchers off guard as shifting global dynamics and a softening U.S. dollar fuel renewed momentum in the metals complex. Ole Hansen, Head of Commodity Strategy at Saxo Bank, believes these moves could signal the start of a new leg higher for precious metals.
From Sideways to Skyward: Precious Metals Defy Expectations
Just weeks ago, many analysts, including Hansen, expected precious metals to consolidate in a narrow range. However, the narrative has rapidly reversed. As June kicked off, gold and particularly silver smashed through critical resistance levels, surprising even seasoned strategists. Platinum, meanwhile, took a breather after a strong rally in May.
Driving this shift is the steady decline of the U.S. dollar. The Bloomberg Dollar Spot Index now hovers near a two-year low, weakening investor appetite for dollar-denominated assets. At the same time, geopolitical instability and renewed trade war concerns have amplified safe-haven demand, providing an extra lift for gold and silver.
Underlying Macro Forces Support the Surge
Beyond technical breakouts, deeper macroeconomic forces are at play. Hansen points out a critical shift in capital flows. For years, global surpluses—especially from export-heavy nations—have funneled into U.S. assets, reinforcing dollar strength. But now, that trend is faltering.
As protectionist policies and political division in the U.S. become more entrenched, many sovereign wealth funds and institutional investors are reevaluating their U.S. exposure. This reevaluation has already bolstered gold prices, as concerns about the sustainability of U.S. fiscal policy take center stage.
A major contributor to those concerns is the looming “refinancing wall”: about $9.2 trillion in U.S. Treasury securities are set to mature in 2025, representing nearly a third of the marketable debt and about 30% of the nation’s GDP. Add to that the Congressional Budget Office’s projected $1.9 trillion deficit for the same fiscal year, and it’s clear that the U.S. will face immense borrowing pressure—potentially in a far less welcoming bond market.
Gold’s Technical Landscape Brightens
Gold has now officially broken out of the downward trend that followed its record high of $3,500 per ounce in April. The price has found a new floor around $3,325, with additional support levels identified at $3,280 and the 55-day moving average near $3,223.
While Hansen is cautious about declaring a straight path to new record highs, he acknowledges the fundamental and technical outlook is turning increasingly favorable. Factors such as reduced post-stimulus spending, supply disruptions due to tariffs, a weakening labor market, and declining real consumer purchasing power could all force a dovish shift by the Federal Reserve. If that happens, he sees potential for gold to approach or even surpass the $4,000 mark.
Silver Shows Strength, Targeting Multi-Year Highs
Silver has also joined the rally in a big way. It jumped 5.4% in a single day—its best performance since October—smashing through a resistance level at $33.68, which has now become a key support. This move was bolstered by gains in both gold and copper, and ongoing dollar weakness.
Although silver paused just shy of its October 2023 peak of $34.90, some profit-taking has occurred without undermining the broader bullish momentum. As long as the $33.68 support holds, the setup remains positive.
Silver’s dual nature—as both a monetary metal and an industrial input—adds another dimension. Hansen notes that the metal is especially sensitive to trends in copper, and ongoing strength in copper prices—driven by strong Chinese demand, tight global supplies, and clean energy investments—could further power silver’s rally.
Gold-to-Silver Ratio Signals More Room for Silver
Another key indicator Hansen is watching is the gold-to-silver ratio, which recently dipped below 98, showing potential for a downward shift. While the five-year average sits near 82, Hansen doesn’t foresee a full return to that level. However, a move back toward 91.5—near the upper range seen from 2023 to 2024—is realistic. If gold prices stay steady, such a shift would imply silver climbing above $36 per ounce.
Final Word: A Bullish Backdrop with Room to Run
Technically and fundamentally, both gold and silver appear well-positioned for further upside. Hansen emphasized that silver in particular could break into new territory if it breaches the October high of $34.90 and the Fibonacci retracement level at $35.20—signaling renewed momentum that may propel it even closer to the highs seen in 2011.
As the U.S. dollar weakens, fiscal concerns mount, and industrial demand holds firm, the conditions for a sustained precious metals rally appear to be taking shape.
