Gold, Silver Prices Dip — But Wall Street Sees 'Most Bullish Set-Up' For This Metal

• Citi analyst Wenyu Yao said that supply shocks from the conflict in the Middle East are likely to send aluminum inventories to all-time lows, bolstering prices for the metal. 
• China, which accounts for nearly 60% of the world's primary aluminum supply, is rapidly ramping up output even as it contends with capacity constraints.
• Meanwhile, gold and silver prices have declined significantly from their highs this year.

The rally in precious metals has slowed, with gold and silver prices dipping to their lowest levels in 1.5 months, as soaring Treasury yields and a firm dollar have overshadowed optimism about a potential U.S.-Iran peace deal.

Meanwhile, Citi is touting aluminum as the next metal to buy, noting that the metal is witnessing the “most bullish set-up” in more than 50 years. According to a CNBC report, analyst Wenyu Yao expects aluminum prices to average around $4,000 per metric tonne in the second half of 2026, nearly 12% higher than current levels.

In comparison, spot gold was trading at $4,473.66 per ounce at the time of writing, down 0.17%, while spot silver traded at around $74.67 per ounce after plunging more than 5% in the previous session.

Aluminum To Benefit From Supply Constraints

Yao noted that supply shocks from the conflict and uncertainty in the Middle East are likely to send aluminum inventories to all-time lows, bolstering higher prices for the metal.

The critical Strait of Hormuz has remained closed for commercial shipping for more than 80 days now. This has impacted not just global oil supply, but has also trapped aluminum shipments in the critical waterway.

Yao said that the supply squeeze will push prices higher regardless of increases in demand. “Unlike previous downturns where weaker demand and eventual supply rationalization loosened the market, the current shock is supply-driven and much of the damage is already done,” Yao reportedly said, adding that the firm expects about 2.7Mt of deficit this year even under sluggish demand.

Last month, economist Steve Hanke cited a JPMorgan warning about the aluminum market entering a “point of no return," to highlight how a deficit of about 2 million tons was forming. “COMMODITY MARKETS = ENTERING A SUPER CYCLE,” Hanke said in a post on X.

China Aluminum Output Surge

Meanwhile, China, which accounts for nearly 60% of the world's primary aluminium supply, is rapidly ramping up output even as it contends with capacity constraints. Daily output reportedly hit an all-time high of 129,000 tons last month, as per Bloomberg.

The country’s alumina exports surged 146.8% month-on-month and 96.62% year-on-year in April 2026, according to a report from Shanghai Metals Market. The report said the surge came as large quantities of alumina shipments from the Middle East were diverted to China and then re-exported.

How Are Markets Reacting?

The State Street SPDR S&P Metals & Mining ETF (XME), which tracks the broader metals and mining industry and has significant aluminum exposure, is up more than 6% this year.

The iShares MSCI Global Metals & Mining Producers ETF (PICK), which tracks companies producing aluminum, steel, precious metals, and coal, including international players, is up more than 18% in the same time.

Meanwhile, the SPDR Gold Shares ETF (GLD) and iShares Silver Trust (SLV) are both up nearly 4% in 2026.

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