James Steel Talks Gold

Summary

Podcast Summary: Bloomberg Talks – James Steel Talks Gold

Date: February 2, 2026
Host: Bloomberg Interviewer & Co-Host
Guest: James Steel, Chief Precious Metals Analyst at HSBC

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Episode Overview

In this episode, Bloomberg’s hosts speak with James Steel, HSBC’s Chief Precious Metals Analyst, for an in-depth discussion about the extraordinary volatility recently seen in the gold and silver markets. They explore what’s driving the rapid price swings, how today’s gold markets compare to previous eras, and what might be on the horizon for gold prices through 2026. The conversation covers central bank buying, supply and recycling dynamics, and the limited broader economic impact of precious metals.

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Key Discussion Points & Insights

1. Recent Volatility in Gold & Silver Markets

• Crowded Trade and Profit-Taking:
  • Steel attributes the recent sharp corrections to new investors flooding into the market, which naturally breeds volatility and profit-taking.
  • Quote:
    • "Any commodity that has this parabolic rally that gold and silver had—and the new entrants into the market, which they were flooding in... it really does invite a volatility, and B, profit taking, stroke, liquidation on any news or developments that run counter to gold." – James Steel (01:13)
• Scale of the Move:
  • Gold made 54 new highs last year. Despite extraordinary price action, Steel cautioned that gold hadn't truly reached a new inflation-adjusted high until it surpassed the 1980 level in today’s dollars (approximately $3,400/oz).
  • Quote:
    • "I always cautioned everybody, I said, look, it's not a new high until we go above in real terms what it was in 1980. In January of 1980, gold hit $850 an ounce and that's about $3,400 in today's market." – James Steel (02:04)

2. Comparing Past and Present Market Rallies

• 1980 vs. Today: The 1980 rally was narrower, driven by a handful of players (notably the Hunt Brothers), whereas today the rally is broad-based with greater participation.
• The volatility now includes price swings as large as the entire price of gold when Steel first began covering the market.
  • Quote:
    • "We had a swing in a couple of days that was equal to the absolute number that gold was trading at when I started covering it." – James Steel (03:17)

3. Price Levels & Targets for 2026

• Gold recently peaked above $5,500/oz before pulling back to around $4,750/oz; silver lost 30% of its value in three days.
• Steel’s year-end projection:
  • High: $5,500/oz
  • Average: Near current (~$4,750/oz)
  • Downside risk: As low as $4,000/oz if major positive developments occur.
  • Factors supporting ongoing strength: expectations for a moderately softer dollar and renewed central bank buying.
  • Quote:
    • "In 22, 23, 24, almost one out of every three ounces of gold that came out of the ground went into a central bank vault. Double or triple the average for the previous 10 years." – James Steel (04:13)

4. Supply, Mining, and Recycling

• Slow Production Response:
  • Unlike oil, new gold mines take decades to come online due to permitting, exploration, and regulatory hurdles.
    • Quote:
      • "By the time a group of geologists said, I think there's some gold here to the time when it went round your finger or your neck was about 10 years. [...] It's closer to 20 now." – James Steel (04:54, 05:10)
• Recycling as a Buffer:
  • Gold is never consumed; it is stored and can be recycled. Recycling has risen, but not as much as anticipated, as holders wait for higher prices.
    • Quote:
      • "What is flexible is recycling. Because gold, unlike oil and grain, is never consumed. It's stored somewhere." – James Steel (05:16)

5. Broader Economic Impacts

• High prices have reduced jewelry demand, now just 35% of global gold consumption (down from ~50%).
• Coin demand has also dropped, yet overall, gold doesn’t usually drive macroeconomic trends—it reacts to them.
  • Quote:
    • "Gold does not have huge macroeconomic impacts. It reacts to macroeconomics. It doesn't set. It's not like oil. It doesn't set the stage. It reacts to the stage." – James Steel (06:34)
• The price of gold can serve as a signal of heightened geopolitical or economic risk, even if those risks don’t materialize.

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Notable Quotes & Memorable Moments

• On the uniqueness of today’s gold rally:
  • "The difference between now and 79 was limited number of buyers at that time... but also a much more broad based [church] this time." – James Steel (02:40)
• On central banks driving the rally:
  • "Almost one out of every three ounces of gold that came out of the ground went into a central bank vault." – James Steel (04:13)
• On the lag in new mine production:
  • "Exploration permitting, et cetera, et cetera, it's closer to 20 now. It takes a very long time." – James Steel (05:10)
• On gold’s limited economic impact:
  • "Gold does not have huge macroeconomic impacts. It reacts to macroeconomics. It doesn't set the stage. It reacts to the stage." – James Steel (06:34)

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Important Timestamps

• 01:13 – Steel explains the immediate drivers of gold/silver volatility
• 02:04 – Contextualizing today's rally versus 1980
• 03:17 – Historical perspective on current volatility
• 03:43 – Gold/silver price levels, forecasts, and central bank demand
• 04:54 – Gold supply: mining versus oil production
• 05:16 – The significance of gold recycling
• 06:34 – Gold’s impact on the broader economy and indications of macro risk

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Conclusion

James Steel delivers a clear-eyed analysis of today’s historic volatility in gold and silver, stressing the roles of broad investor participation, central bank buying, and supply constraints. While he forecasts ongoing turbulence and emphasizes gold’s value as a macroeconomic signal, he downplays its direct economic influence. The conversation is steeped in context, helping listeners make sense of record-breaking market moves and what might come next.

Transcript

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[Podcast Host]

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[Bloomberg Interviewer]

News Cannot stop talking about the precious metals. Right. So we're seeing some signs of moderating here this morning. But the size of the losses that we have seen in precious metals and silver, gold, copper is one really for the history books. So let's talk more about it and where things might be headed with James Steel, chief precious metals analyst at hsbc. He joins us live in our Bloomberg Studios. James, good to see. Happy Monday morning to you.

[James Steel]

Thank you. Good morning.

[Bloomberg Interviewer]

So is this just really about this gold and silver trade being too crowded and people were just trying to try to get at or is there something else going on here?

[James Steel]

Well, I think you've effectively hit the head on the nail for the immediate reason. I mean, any commodity that has this parabolic rally that gold and silver had and the new entrants into the market which they were flooding in and have been for many, many months now, it really does invite A volatility and B, profit taking, stroke, liquidation on any news or developments that run counter to gold. And we had a couple of them within a few days. And it really did give us a big and deserved I think, correction in both gold and silver.

[Bloomberg Co-Host]

James, you've been at this precious metal game for decades now. Just put into context the volatility both on the upside and then the downside on Friday. Those handful of days saw just extraordinary volatility. Just put that into context.

[James Steel]

Well, yes, you're right and it's extraordinary. And so was the rally we were talking about. Gold made a 54, I think new highs last year and people were talking about a new high, a new high. And I always cautioned everybody, I said, look, it's not a new high until we go above in real terms what it was in 1980. In January of 1980, gold hit $850 an ounce and that's about $3,400 in today's market.

[Bloomberg Interviewer]

There you go.

[James Steel]

And they did that in April last year. And then I said, okay, now we can genuinely talk about a new high. We can genuinely talk about a real rally. And, and the difference between now and 79 was limited number of buyers at that time, Hunt Brothers, especially in silver, but also a much more broad based church this time. A lot of, a lot, a lot in it, but the volatility nonetheless. And to look at it this way, we had a swing in a couple of days that was equal to the absolute number that gold was trading at when I started covering it.

[Bloomberg Interviewer]

Wow. That puts it in perspective, right?

[James Steel]

Yeah.

[Bloomberg Interviewer]

So, you know, it's just when you look at where we've come, I mean gold topped 50, $500 an ounce last week. It's now at about 4750, I guess spot gold. Silver wiped out 30% of its value in just three days. Do you have a target for gold by the end of this year? Because for many who had their target at 5,500, well, it already blew past that in just the first month.

[James Steel]

Yeah, Our high for the rest of the year is 55. We have an average which is almost where it is now. And we're expecting a very wide range. Good news could take us down closer to the $4,000 level. But what we think will likely, the research view is that we have a moderately softer dollar this year according to rfx. People who've been pretty bang on on that. And also we would I think very likely see a resumption in a greater central bank buying. I mean they are the ones that kicked off the genesis of this rally back in 2022, if you look at it this way, in 22, 23, 24, almost one out of every three ounces of gold that came out of the ground went into a central bank vault. Double or triple the average for the previous 10 years.

[Bloomberg Interviewer]

That's incredible.

[James Steel]

Yeah, truly.

[Bloomberg Co-Host]

So when I think about a commodity, let's just take oil prices spike up, they start drilling holes in Texas. What happens when you see gold just spike up? I mean they don't start digging more mines?

[James Steel]

No. Well, not in the near term. You know, again, when I first started covering the markets, by the time a group of geologists said, I think there's some gold here to the time when it went round your finger or your neck was about 10 years.

[Bloomberg Co-Host]

Wow.

[James Steel]

Exploration permitting, et cetera, et cetera, it's closer to 20 now.

[Bloomberg Co-Host]

Really.

[James Steel]

It takes a very long time. You know, it's highly capital intensive and the low hanging fruit has been Picked. So we're going into different regions and areas. What is flexible is recycling. Because gold, unlike oil and grain, is never consumed. It's stored somewhere.

[Bloomberg Interviewer]

It's either around your neck or on.

[James Steel]

Your neck in a central bank vault. In a vault, some other place in a bar, in a coin. And that's what can be mobilized at fairly short term. Now, what we've noticed is that we haven't seen the response on the recycling side. It is higher, but it's not as high as I would have expected. And it's rather like owning a home. If the market keeps going up, you may refrain from putting your flat on the market. But when it comes down a bit, you might then say, okay, maybe we've hit the high. I should sell now. So we may see a pickup in recycling.

[Bloomberg Interviewer]

You know, I just wonder, I mean, outside of just of investors, what is the larger impact on the economy? The fact that we have gold prices and we do use gold in different ways every day, Gold and silver prices being as high as they are, even despite the pullback we saw recently, they're still relatively high. What is that impact on the broader economy?

[James Steel]

Well, it has been good for jewelry. Simply put, jewelry is often about 50% of physical gold demand. We calculate that last year it was only 35%. It's been down double digit. Also, there's a reduction in coin demand. But generally speaking, gold does not have huge macroeconomic impacts. It reacts to macroeconomics. It doesn't set. It's not like oil. It doesn't set the stage. It reacts to the stage. And that's why you've got to pay attention, because the gold price does tell you that there are geopolitical or economic risks. They may not materialize. But the geopolitical risk index is fairly high and persistently high.

[Bloomberg Co-Host]

All right, folks, glco, that is the function of the day, gives you all the global commodities. You click on the metals and then it breaks it down between base metals, ferrous metals, and precious metals. So there you go. That's the function you need to be on top of what's happening in the world of commodities. James Steele, thank you so much. We appreciate it. James is chief precious metals analyst at hsbc. Whenever we see big moves in precious metals, by far the first phone call we go out to is to James Steele. And he's kind of to give us some of his time. There's.