Gold’s powerful rally not over yet.
BNP Paribas has joined a growing list of major financial institutions projecting further upside for bullion, with David Wilson, Director of Commodities Strategy at BNP, stating that gold could climb to US$6,000 per ounce by year-end as macroeconomic and geopolitical risks continue to build.
Speaking on Bloomberg Television, Wilson argued that the current rally “makes sense” in today’s global environment, where uncertainty remains elevated and central banks continue to accumulate gold at a robust pace.
Gold-Silver Ratio Signals Further Divergence
One of the key themes highlighted by Wilson is the gold-silver ratio, which, while still below its two-year average in the 80s, has begun rising again.
“I think there is still room for further disconnect,” Wilson noted. “Gold to me makes sense in a way that silver doesn’t provide the same sort of, let’s say, risk protection.”
In simple terms, gold continues to act as a strategic hedge against systemic risk, while silver’s price behaviour is being driven more by industrial demand and speculative volatility. That divergence could widen further if global uncertainty intensifies.
Central Bank Buying Remains a Powerful Tailwind
Gold’s structural support remains intact.
Poland recently announced plans to purchase another 150 tonnes of gold, after already being the largest buyer last year. Meanwhile, China’s central bank extended its gold buying streak to a 15th consecutive month in January — underscoring continued official demand.
ETF inflows into bullion have also remained steady. Although there was a brief drop during last week’s correction, inflows quickly resumed — a sign that institutional appetite remains strong.
Major banks including Deutsche Bank and Goldman Sachs have echoed similar bullish outlooks, citing long-term demand drivers such as:
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Central bank reserve diversification
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Persistent geopolitical tensions
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Elevated sovereign debt levels
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Ongoing concerns about currency debasement
Silver’s Volatility Returns
Silver, by contrast, has experienced extreme volatility in recent months. Strong physical buying in Asia initially supported prices, but supply has begun flowing back into Europe and Asia, softening the physical market.
The approaching Lunar New Year holiday is also expected to temporarily dampen demand in China.
Unlike gold, silver’s dual role as both a precious and industrial metal makes it more sensitive to shifts in manufacturing activity and short-term speculative flows.
Why Did Gold and Silver Suddenly Fall?
Despite the bullish long-term outlook, precious metals experienced a dramatic overnight selloff.
Reports emerged that Russia is considering a potential return to US dollar settlement as part of broader economic cooperation with the United States.
Markets reacted swiftly:
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Silver plunged nearly 10% in around 30 minutes
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Gold dropped roughly 3.5% in 15 minutes, falling back below US$5,000
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An estimated US$3.2 trillion in global market value was wiped out within an hour
What Is Being Proposed?
While details remain limited, the reported framework includes:
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US–Russia cooperation on fossil fuel production
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Joint natural gas infrastructure investment
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Partnerships in offshore oil and critical raw materials
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Preferential treatment for US commercial interests
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Russia’s return to US dollar-based trade settlement
In essence, the proposal suggests Russia could pivot back toward the US financial system — potentially reversing years of “de-dollarisation” efforts.
Why Would That Pressure Gold?
Gold and silver are traditionally viewed as hedges against:
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Geopolitical instability
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Currency debasement
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Fragmentation of the global financial system
The de-dollarisation narrative has been a powerful driver of gold demand in recent years. If Russia were to re-engage with the US dollar system, it could signal renewed confidence in dollar dominance.
A stronger US dollar typically weighs on precious metals, as both gold and silver are priced in USD and often move inversely to it.
In short, if confidence in the dollar rises, the urgency to hold alternative stores of value temporarily declines — explaining the sharp, rapid selloff.
Short-Term Shock, Long-Term Opportunity
However, it is important to distinguish between short-term market reactions and long-term structural trends.
Central banks are still buying.
Global debt remains elevated.
Geopolitical tensions have not disappeared.
Inflation risks persist.
Monetary policy uncertainty continues.
A single geopolitical headline does not erase these structural drivers.
If anything, sharp corrections in a strong bull market often create opportunity.
A Cost-Averaging Opportunity for Physical Buyers
For long-term investors in physical bullion, this pullback may represent:
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A strategic entry point
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A cost-averaging opportunity
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A chance to accumulate during volatility
Physical gold and silver ownership is not about reacting to 15-minute market swings. It is about preserving purchasing power over time.
When markets overreact to headlines, disciplined investors often step in.
If BNP’s US$6,000 target proves accurate, today’s retracement could be remembered as a temporary shakeout within a larger structural bull market.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consider their individual circumstances and seek professional guidance before making investment decisions.
