Heraeus: Prolonged USD Weakness Could Supercharge Gold, Central Banks Turning to Silver

by Donnie Dauria

Market Drivers

Precious metals analysts at Heraeus see a powerful shift underway: the U.S. dollar may be entering a long cycle of depreciation, setting the stage for higher gold prices. At the same time, silver is beginning to attract central bank interest — a development that could transform demand for the gray metal.

“Traditionally, gold rises when the dollar weakens and falls when it strengthens,” Heraeus analysts wrote. “What’s unusual about the rally since 2016 is that gold has climbed even as the dollar gained strength.” With U.S. trade disputes, tariffs, and deficits persisting, they argue the dollar now faces a sustained weakening trend — a key tailwind for bullion.

Gold: Institutional & Investor Demand Accelerates

  • ETF holdings: up 397 tonnes (+12.3%) in H1
  • Bar & coin demand: up 6.4% year-on-year to 631 tonnes
  • Support zone: $3,450–$3,500/oz
  • Spot price: $3,634.35/oz (+1.34% daily)

Central banks continue to diversify away from dollar exposure, reinforcing gold’s role as the ultimate insurance asset. Heraeus highlighted that government interference in Fed policy including pressure  to cut rates adds further risk of policy missteps.

Markets are already fully pricing in a Fed rate cut after Friday’s weak payrolls data. The only debate, Heraeus noted, is whether the cut will be 25 bp or 50 bp. With gold breaking above $3,600 and now testing $3,700, analysts see further gains as likely.

Silver: Central Banks Enter the Market

Unlike gold, silver has historically been absent from central bank reserves. That may be changing. Heraeus pointed to Russia’s announcement earlier this year that it will purchase $535.5 million in silver over the next three years as a sign of official-sector interest in diversifying beyond gold.

  • Spot silver: $41.41/oz (+1.03% daily)
  • Resistance: $41.40/oz (tested multiple times last week)

With industrial demand already strong from solar, electrification, and AI-driven technologies, the addition of central bank demand could provide a new structural pillar for silver prices.

Investor Takeaway

  • Gold: Long-term structural case remains intact. With central banks and ETFs adding aggressively, dips into the $3,450–$3,500 zone offer accumulation opportunities. Baseline trajectory points higher as USD weakness accelerates.
  • Silver: Watch for confirmation of central bank demand. A decisive break above $41.40 opens the door to further upside, with the potential for silver to reprice if reserve diversification becomes a broader trend.

Positioning Strategy

  • Gold: Maintain core holdings; buy dips below $3,500.
  • Silver: Build exposure gradually — momentum plus emerging central bank interest signal strong medium-term upside.

MetalStacks Members: With gold pushing into new record territory and silver gaining institutional credibility, now is the time to position ahead of the next wave. Wholesale access and expert insights can help you capitalize on this evolving metals super cycle.

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