BlackRock’s view backs the idea that gold’s correction has been driven by rates, not by fading long-term demand. Near-term direction depends mainly on real yields and the dollar. With markets pricing further Fed tightening, rallies are likely to be hard to sustain, and gold has tended to fall rather than rise as geopolitical risk lifts oil, inflation and hike expectations. Central bank buying offers some support on dips, but BlackRock expects that buying to slow from its recent pace. Silver remains the more cyclical and riskier of the two, more exposed to swings in industrial demand and growth expectations.---EarlierThree drivers setting gold’s tone as December Fed hike bets build, according to Standard Chartered---BlackRock says gold’s structural support from central banks is intact, but with real yields and the dollar working against it, investors should expect it to stabilise portfolios rather than repeat last year’s surge.Summary:Gold is around $3,870/oz, about 28% below its record near $5,400 on 29 JanuaryThe pullback reflects the unwinding of debasement trades as US growth rebounded, real yields rose and the dollar strengthenedCentral banks bought more than 3,900 tonnes between 2022 and the first half of 2026, and a record 45% plan to add moreGold has overtaken US Treasuries as the largest share of global reserves for the first time in about 30 yearsSince 2020, gold has returned about 2% on average in months when the S&P 500 fell more than 5%Silver is around $52, more than 55% below its January record near $118, and around 60% of its demand is industrialGold’s long-term case is still intact after a sharp pullback from its January record, but investors should expect steadier, more moderate returns rather than a repeat of the past year’s surge, according to BlackRock. In a note published on 10 November, Kristy Akullian, head of iShares investment strategy for the Americas, described the outlook for precious metals as more balanced, with near-term headwinds now offsetting longer-term support.Gold hit a record of around $5,400 an ounce on 29 January. Based on BlackRock’s data, it had fallen about 23% from that peak by mid-October. The decline has continued since, and gold now trades around $3,870, roughly 28% below the high. The firm puts much of the fall down to the unwinding of so-called debasement trades. Worries about rising government debt had pushed investors into hard assets. As US growth rebounded, real yields rose and the dollar strengthened, the focus shifted, and gold lost ground along with digital assets.Those same forces remain the main near-term obstacle. Gold pays no income, so higher real yields and a firmer dollar raise the cost of holding it. That backdrop is unlikely to ease quickly while markets are pricing further Fed tightening.BlackRock argues that the longer-term support comes mainly from central banks. They hold about a fifth of all gold ever mined and bought more than 3,900 tonnes between 2022 and the first half of 2026. Gold has also overtaken US Treasuries as the largest share of global reserves for the first time in three decades. In a 2026 survey, a record 45% of central banks said they plan to add to their own holdings. BlackRock expects that buying to slow from its recent pace but to remain an important support. A newer source of demand is stablecoin issuers, some of which now hold gold as reserves.BlackRock presents gold as a portfolio stabiliser rather than a trade. Since 2020, gold has returned about 2% on average in months when the S&P 500 fell more than 5%, while bonds were broadly flat.Silver has been far more volatile. It hit a record near $118 in January and now trades around $52, more than 55% below that peak, a reminder that its swings have historically been up to twice the size of gold’s. Around 60% of silver demand comes from electronics, solar and semiconductors. That gives it more upside in a strong economy, but more downside when growth weakens. This article was written by Eamonn Sheridan at investinglive.com.