Gold and silver rallies likely on pause despite new tariffs, higher inflation, and Middle East escalation – StoneX’s O’Connell

StoneX’s Rhona O’Connell argues gold and silver are fundamentally supported by Middle East escalation (Iran conflict), renewed tariff uncertainty, and higher producer-side inflation, but the rally looks technically stretched and due for a near-term pause. She flags gold “at the top of its uptrend” with RSI approaching 70, while silver is “sitting on a Fibonacci retracement level” after a steep correction—implying an unwind of overbought conditions is likely unless there is further geopolitical escalation. On positioning/flows, O’Connell notes limited “exchange-based speculative overhang” in both metals: gold ETFs have made only small additions YTD and CFTC net longs are “well down.” Silver ETFs have seen “chunky redemptions,” while CFTC shows some long nibbling and substantial short covering; importantly, silver’s net long is ~1,395t, just 29% of the 12-month average. On physical/warehouse signals, COMEX silver inventories have fallen sharply to ~11,207t (down ~5,323t since end-September), moving back toward a more “normal” 9,000–10,000t range, which she says should help ease London tightness and reduce volatility. COMEX gold inventories are down ~91t (8%) YTD to ~1,036t, ~11% below the 2025 average. Market implication: with speculative positioning already cleansed, she sees limited downside even if prices consolidate—i.e., less risk of heavy selling into strength, but also evidence stakeholders may view the move as “overdone.” Key catalyst/risk is further Middle East escalation (or de-escalation), alongside tariff legal developments (IEEPA/S122 challenges) and inflation data prints; absent new shocks, she expects a “breather” while the broader tone stays risk-off. Prices cited in the piece show a sharp risk-off/volatility move on the session: spot gold down 4.38% to ~$5,088.83/oz and spot silver down 8.18% to ~$82.036/oz (suggesting violent two-way flows despite safe-haven narratives).