‘Spectacular unwinding’ of gold part of ‘sharp but transient dynamics’

John Wyn-Evans, Head of Market Analysis at Rathbones, comments on the sharp pullback in gold and silver, arguing the move reflects a rapid unwind of leveraged positioning rather than a shift in the long-term case for precious metals.

John Wyn-Evans, Head of Market Analysis at Rathbones, one of the UK’s leading wealth and asset management groups, said: “Not for the first time in recent market history, we’re witnessing a spectacular unwinding of leveraged positions, this time in precious metals.

“The sharp pullback in gold looks more like a liquidity and positioning event than a change in the long‑term case for the asset. After a powerful run‑up driven by momentum strategies, short squeezes and leveraged buying, that same positioning has unwound rapidly, amplifying downside moves. Reports of unsettled trades in parts of the metals market have added to near‑term pressure, but, in our view, this reflects stress among specific market participants rather than systemic weakness across precious metals.

“Macro drivers have also played a part. A firmer US dollar and shifting interest‑rate expectations can mechanically weigh on gold in the short term, particularly when speculative positioning is elevated. These dynamics can be sharp but are often transient.

“From a portfolio perspective, our stance is unchanged: the strategic rationale for holding gold as a diversifier – against market volatility, geopolitical risk and policy uncertainty – remains intact. We continue to see a role for measured exposure to precious metals within a balanced, long‑term investment strategy, while recognising that near‑term moves may be dominated by technical factors and positioning.”

Warsh nomination recalibrates market expectation

John Wyn-Evans says: “The sharp reversal in gold’s momentum was helped along by President Trump’s decision to nominate Kevin Warsh as the next Fed Chair. Only days earlier he seemed out of the running, but his return to the frame reminded markets of his instinctively hawkish leanings and reduced the urgency for hard‑asset hedges. A firmer dollar followed, supported by Treasury Secretary Scott Bessant’s reiteration of a traditional strong‑dollar stance.

“Warsh’s confirmation is not guaranteed – Washington’s usual political cross‑currents, including a brief government shutdown, could slow the process – but his stated desire to shrink the Fed’s balance sheet sits uneasily with the recent need to expand it again to stabilise repo markets. Any tightening on that front could shift more responsibility onto the Treasury as the yield curve continues to steepen.

“For now, markets expect no change to rates until July and only two cuts for 2026. It amounts to a modest recalibration rather than a major pivot – but just enough to take some speculative heat out of gold.”