Is gold entering a consolidation phase after record-setting rally?

Palladium emerged as the top-performing precious metal in the markets, escalating by 1.85% during the week. Proponents of domestic mining, such as Senators Steve Daines, Tim Sheehy, and Montana’s congressional delegation, have introduced the bipartisan Stop Russian Market Manipulation Act (S. 808). This proposed legislation aims to ban imports of critical minerals like palladium, platinum, and copper from Russia. The goal is to curb Russia’s market manipulation tactics, which have caused palladium prices to drop significantly and resulted in layoffs at Montana’s Sibanye-Stillwater Mine, the sole primary producer of platinum and palladium in the United States. By encouraging domestic mining and reducing reliance on foreign sources, the bill seeks to enhance national security and bolster American jobs.

New Gold experienced a surge in shares by as much as 19% after finalizing the $300 million acquisition of the remaining 19.9% free cash flow interest in its New Afton mine. This strategic move ensures 100% ownership and mitigates dilution risk. Strong first-quarter results, including $25 million in free cash flow and robust copper by-product credits, underscore the role of earnings quality and cash flow generation in boosting investor confidence. Analysts at RBC and National Bank have restated their “Outperform” ratings, citing the strategic consolidation and improved financial outlook.

Following gold’s record-breaking rally, the precious metal seems to be entering a consolidation phase, a common occurrence after significant surges. Bloomberg reports that investors who poured funds into gold-backed ETFs earlier this year are now showing signs of heavy positioning, indicating reduced buying power for further upward movements in the market.

On the flip side, silver experienced a downturn, emerging as the worst-performing precious metal of the week with a decline of 3.43%. Financial institutions like Macquarie and BMO initiated a record 58-million-ounce physical delivery against May Comex futures, leading to a drastic unwind of arbitrage positions prompted by earlier tariff concerns. The tariff carve-out for silver resulted in collapsing premiums, triggering a cascade of position closures and a decline in short-term demand sentiment.

In China, the Gold Association reported a 5.96% year-on-year drop in gold consumption in the first quarter of 2025, attributing it to reduced demand for gold jewelry and industrial use, despite a rise in gold bars and coins purchases. Trump’s easing trade war concerns have contributed to a decline in gold prices, reflecting reduced demand for the safe-haven asset.

Gold Fields Ltd. posted a surge in profits in 2024, marking ambitions to acquire the remaining 50% of the Gruyere mine controlled by Gold Road Resources Ltd. in a potential deal that could emerge following Gold Road’s trading halt. Central banks and retail investors are keeping a close eye on gold, with U.S. gold ETF purchases on the rise as the metal’s bullish trend continues. Additionally, Alkane Resources and Mandalay Resources have agreed to merge, signaling consolidation in the industry.

The ongoing gold rally has positioned the precious metal as an attractive asset with President Trump’s tariff disputes reshaping the global economic landscape. Meanwhile, Barrick Gold’s employment disputes in Mali have led to employee layoffs, underscoring the challenges faced by mining companies in navigating geopolitical hurdles. The World Gold Council reports a decline in jewelry demand, emphasizing the need for adaptation in the gold market landscape.