Gold and Silver Have Pulled Back… But Have the Fundamentals Changed?

After reaching record highs earlier this year, both gold and silver have pulled back.  For some investors, that raises an obvious question: 

The short answer is yes, but probably not in the way many people think.  

One of the biggest drivers behind gold hasn't gone away. Central banks around the world continue to buy gold as part of their long-term reserves, with many looking to diversify away from traditional reserve assets. Unlike short-term traders, these institutions are investing with decades in mind.

While gold prices may move higher or lower in the short term, this ongoing demand continues to provide an important foundation for the market.

Silver has always been more volatile than gold. It's both a precious metal and an industrial metal, meaning its price is influenced by investor demand as well as industries like electronics, renewable energy and manufacturing.

Although silver has pulled back from its highs, the market is still expected to remain in a supply deficit during 2026, meaning demand continues to outpace newly mined supply.

That doesn't guarantee prices will rise overnight, but it does remain an important long-term fundamental.

For Kiwi investors, the international gold or silver price is only part of the equation. Both metals are priced in US dollars, so movements in the New Zealand dollar can have a significant impact on local bullion prices.

At the same time, inflation remains above the Reserve Bank's target range, reminding many investors why they continue to diversify into tangible assets.

The excitement that pushed gold and silver to record highs has certainly cooled. Higher interest rates and profit-taking have weighed on prices, and markets remain volatile.

But many of the reasons investors own precious metals haven't disappeared.


Silver remains in a structural supply deficit.

Physical precious metals continue to offer diversification outside the traditional financial system.

Markets rarely move in a straight line. Corrections are a normal part of every investment cycle.

For long-term investors, the more important question isn't where prices were six months ago, it's whether the reasons for owning gold and silver still make sense today.

Gold and silver have pulled back from record highs, but have the fundamentals changed? Discover what's driving the market today.

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