Gold has remained remarkably resilient despite elevated bond yields, while silver appears increasingly burdened by excess supply, according to Daniel Ghali, head of metals research at Deutsche Bank. Copper, however, may offer the largest potential gains across the metals complex.
Speaking with BNN Bloomberg, Ghali said the multidecade highs in bond yields have pressured gold without forcing the metal to establish a fresh low since July. He described the retreat as surprisingly restrained given the broader market environment.
“The pullback in gold, I would actually argue, has been incredibly limited,” Ghali said. He noted that US yields and crude oil prices had climbed sharply, yet gold continued to resist a deeper breakdown.
“Gold markets have faced a strikingly different outlook for the Fed. US 10-year yields have rocketed north of 5%. Crude oil is trading north of $100 a barrel. And yet, gold prices still haven’t managed to print a new low since July. That’s a really strong, resilient price action in my book.”
Ghali said the present setup resembles conditions seen in 2022, while positioning in gold is probably at its most bearish level since October 2021. The surrounding market structure, however, has changed considerably since then.
Official sector purchases are running at more than twice their earlier pace, he said. The network of institutional investors participating in gold has probably expanded by roughly 70% since 2021, while reserve managers also have a larger pool of reserves available for allocation.
Ghali said the argument for increasing gold allocations has strengthened over the past several months, making the continued absence of discretionary participants surprising. He added that gold’s weak performance during the war in Iran shocked some market participants and kept them on the sidelines.
Looking toward next year, Ghali sees a favorable combination of depressed positioning and limited ownership. “Positioning is low, gold is oversold as-is and it’s underowned. So this is a really great time for gold.”
Ghali also rejected the idea that investors must make a simple choice between bonds and gold. In his view, the bear market in treasuries is helping drive institutional investors toward greater diversification.
Large pension funds, endowments, trusts and insurance companies have increased their allocations to alternative assets dramatically over the past 20 years, he said. Yet many of those assets remain sensitive to yields, creating room for more gold within the alternatives mix.
Silver presents a sharply different picture after reaching all time highs in the early months of the year and then pulling back 50% following the start of the Iran war. Ghali said the physical availability outlook has changed dramatically.
Deutsche Bank’s measure of free floating London inventories has returned to its highest level since November 2024. Comex retains a substantial stockpile after attracting a tidal wave of metal imports into the United States, while inventories in Shanghai have also risen.
Higher prices have also damaged demand, particularly in China’s solar sector. “Our read on Chinese industrial demand, specifically for silver, for solar, is probably down by a third in 2026 relative to last year.”
That leaves more inventory available to cover a shrinking deficit and possibly a physical primary market surplus in the coming year. Ghali expects greater availability to constrain volatility and cause silver to underperform gold going forward.
Copper offers the most compelling potential for major gains over the short and medium term, Ghali said. Deutsche Bank sees what may be the most acutely scarce copper environment on record dating back to the 1980s.
Years of stockpiling by the United States and China have locked up a large portion of aboveground copper inventories. “Another way to put that is that the US and China combined now probably have locked up about 70% of the world’s global inventory pool,” Ghali said.
That concentration has created a critically scarce copper market, according to Ghali. Deutsche Bank expects copper prices to rise as that scarcity becomes increasingly influential.