Deutsche Bank: Gold's resilience supports a positive outlook, silver faces oversupply, and copper may emerge as the biggest winner.
2026-10-03 01:22:16
In a recent interview, Daniel Galli, head of metals research at Deutsche Bank, released a major assessment of the metals market: Amid high yields suppressing the market, gold prices have shown resilience and a positive outlook; silver, which previously surged, has seen a complete reversal in its fundamentals and has entered a period of oversupply, with its performance likely to remain weak; while the copper market is experiencing a rare shortage, making it the metal with the greatest potential for short- to medium-term price increases. 
Gold: Strong Fundamentals, Promising Investment Opportunities for Next Year Regarding the performance of the gold market, Gali stated that the current market faces multiple negative pressures: the US 10-year Treasury yield has surged above 5%, international crude oil prices have stabilized at a high of $100 per barrel, and the Federal Reserve's policy outlook has changed significantly. These multiple pressures should have severely impacted gold prices. However, the actual trend has been remarkably resilient. Since July of this year, gold prices have not hit new lows, and the current correction has been very limited. He analyzed that the current gold market structure is highly similar to that of 2022, with market sentiment at its most pessimistic level since October 2021. However, the underlying market logic has undergone a fundamental positive shift. On the one hand, official institutions worldwide have significantly increased their gold purchases, more than doubling the rate of purchases compared to 2021. On the other hand, the institutional investor group in gold continues to expand, with the number of participating institutional investors increasing by approximately 70% compared to 2021, and the available reserve funds of reserve management institutions in various countries have expanded accordingly. Furthermore, the investment logic of increasing gold allocation has been continuously strengthened in recent months. Regarding market caution, Gali explained that gold's safe-haven performance underperformed expectations amid the Iranian geopolitical conflict, leading some investors to adopt a wait-and-see attitude; however, this is only a short-term disruptive factor. Looking ahead to 2027, the gold market presents significant advantages: low market holdings, deeply oversold gold prices, and low institutional allocation ratios—multiple positive factors combined create an excellent investment window for gold. Asset Allocation Logic: No Necessary Choice, US Treasury Bear Market Forces Increased Gold Allocation Addressing the widely discussed question of "how to choose between gold and bonds," Gali provides a clear answer: there is no need to choose one over the other. The current market has largely overlooked the core logic—the US Treasury bear market is forcing global institutional investors to accelerate asset diversification. Over the past two decades, large institutions such as global pension funds, endowments, trusts, and insurance companies have significantly increased their allocation to alternative assets, but most alternative assets remain highly sensitive to market yields. With the continued bear market in US Treasury bonds, the value of traditional fixed-income assets has declined. Gold, as a high-quality alternative asset with low correlation and resistance to volatility, has become a core choice for institutions to diversify risk, leading to a continuous increase in market demand. Silver: Supply and demand dynamics have completely reversed, with continued pressure expected in the future. In the first half of 2026, silver prices surged to historical highs, subsequently retreating sharply by 50% due to the Iran war. Regarding the future of silver, Gali stated bluntly that its fundamentals have undergone a radical reversal, and the market structure has completely abandoned its previous state of scarcity. From an inventory perspective, last year's physical silver inventory shortage was comparable to the extreme situation half a century ago when the Hunt brothers monopolized the silver market, while current inventory supply is significantly more abundant. Freely circulating silver inventory in London commercial vaults has rebounded to its highest level since November 2024; silver inventory on the New York Mercantile Exchange is severely overstocked, far exceeding the market's open interest demand, and can readily hedge against supply fluctuations in the London market; simultaneously, Shanghai silver inventory is also rising, resulting in a comprehensive global supply easing. From a demand perspective, high silver prices have triggered a significant collapse in demand. Data shows that in 2026, industrial silver demand in China's photovoltaic sector will decline by one-third compared to last year. The current silver market exhibits a dual weakness: rising inventories and contracting demand. The annual supply-demand gap continues to narrow, and by 2027, it is highly likely to completely shift to a physical supply surplus. Gali predicts that silver will continue to underperform gold, and the gold-silver ratio will further deteriorate. Simultaneously, the loose supply and demand will significantly compress silver's volatility, making it unlikely that the previous year's sharp rises and falls will be replicated; the overall trend will be flat and persistently weak. Copper: Decades of Extreme Shortage Makes it the Most Potential Metal Among all metals, Gali is most optimistic about copper's short-to-medium-term prospects, believing it will become the metal with the greatest potential for price increases, with price elasticity far exceeding that of gold and silver. He points out that the current global copper market shortage is at an all-time low since the 1980s, and copper prices will continue to react more strongly to the supply-demand gap. The core reason is the long-term strategic stockpiling by China and the US, which has locked up the vast majority of global spot inventories. Currently, the copper inventories locked up by China and the US together account for 70% of the global total, resulting in an extreme scarcity of available spot goods in the market. Given the extreme supply-demand mismatch, global copper inventories remain low, demand is steadily supported, and scarcity is constantly being strengthened. Copper prices will subsequently rise based on the tight supply fundamentals, possessing extremely strong upward momentum.
Gold: Strong Fundamentals, Promising Investment Opportunities for Next Year Regarding the performance of the gold market, Gali stated that the current market faces multiple negative pressures: the US 10-year Treasury yield has surged above 5%, international crude oil prices have stabilized at a high of $100 per barrel, and the Federal Reserve's policy outlook has changed significantly. These multiple pressures should have severely impacted gold prices. However, the actual trend has been remarkably resilient. Since July of this year, gold prices have not hit new lows, and the current correction has been very limited. He analyzed that the current gold market structure is highly similar to that of 2022, with market sentiment at its most pessimistic level since October 2021. However, the underlying market logic has undergone a fundamental positive shift. On the one hand, official institutions worldwide have significantly increased their gold purchases, more than doubling the rate of purchases compared to 2021. On the other hand, the institutional investor group in gold continues to expand, with the number of participating institutional investors increasing by approximately 70% compared to 2021, and the available reserve funds of reserve management institutions in various countries have expanded accordingly. Furthermore, the investment logic of increasing gold allocation has been continuously strengthened in recent months. Regarding market caution, Gali explained that gold's safe-haven performance underperformed expectations amid the Iranian geopolitical conflict, leading some investors to adopt a wait-and-see attitude; however, this is only a short-term disruptive factor. Looking ahead to 2027, the gold market presents significant advantages: low market holdings, deeply oversold gold prices, and low institutional allocation ratios—multiple positive factors combined create an excellent investment window for gold. Asset Allocation Logic: No Necessary Choice, US Treasury Bear Market Forces Increased Gold Allocation Addressing the widely discussed question of "how to choose between gold and bonds," Gali provides a clear answer: there is no need to choose one over the other. The current market has largely overlooked the core logic—the US Treasury bear market is forcing global institutional investors to accelerate asset diversification. Over the past two decades, large institutions such as global pension funds, endowments, trusts, and insurance companies have significantly increased their allocation to alternative assets, but most alternative assets remain highly sensitive to market yields. With the continued bear market in US Treasury bonds, the value of traditional fixed-income assets has declined. Gold, as a high-quality alternative asset with low correlation and resistance to volatility, has become a core choice for institutions to diversify risk, leading to a continuous increase in market demand. Silver: Supply and demand dynamics have completely reversed, with continued pressure expected in the future. In the first half of 2026, silver prices surged to historical highs, subsequently retreating sharply by 50% due to the Iran war. Regarding the future of silver, Gali stated bluntly that its fundamentals have undergone a radical reversal, and the market structure has completely abandoned its previous state of scarcity. From an inventory perspective, last year's physical silver inventory shortage was comparable to the extreme situation half a century ago when the Hunt brothers monopolized the silver market, while current inventory supply is significantly more abundant. Freely circulating silver inventory in London commercial vaults has rebounded to its highest level since November 2024; silver inventory on the New York Mercantile Exchange is severely overstocked, far exceeding the market's open interest demand, and can readily hedge against supply fluctuations in the London market; simultaneously, Shanghai silver inventory is also rising, resulting in a comprehensive global supply easing. From a demand perspective, high silver prices have triggered a significant collapse in demand. Data shows that in 2026, industrial silver demand in China's photovoltaic sector will decline by one-third compared to last year. The current silver market exhibits a dual weakness: rising inventories and contracting demand. The annual supply-demand gap continues to narrow, and by 2027, it is highly likely to completely shift to a physical supply surplus. Gali predicts that silver will continue to underperform gold, and the gold-silver ratio will further deteriorate. Simultaneously, the loose supply and demand will significantly compress silver's volatility, making it unlikely that the previous year's sharp rises and falls will be replicated; the overall trend will be flat and persistently weak. Copper: Decades of Extreme Shortage Makes it the Most Potential Metal Among all metals, Gali is most optimistic about copper's short-to-medium-term prospects, believing it will become the metal with the greatest potential for price increases, with price elasticity far exceeding that of gold and silver. He points out that the current global copper market shortage is at an all-time low since the 1980s, and copper prices will continue to react more strongly to the supply-demand gap. The core reason is the long-term strategic stockpiling by China and the US, which has locked up the vast majority of global spot inventories. Currently, the copper inventories locked up by China and the US together account for 70% of the global total, resulting in an extreme scarcity of available spot goods in the market. Given the extreme supply-demand mismatch, global copper inventories remain low, demand is steadily supported, and scarcity is constantly being strengthened. Copper prices will subsequently rise based on the tight supply fundamentals, possessing extremely strong upward momentum.
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