Unlike Asia, where 85% of LNG imports are long-term contracted, Europe relies on the spot market for over half its supply. This structural difference makes European gas prices significantly more sensitive to global supply disruptions and competition for spot volumes, such as recent shifts caused by Middle East tensions.
Despite soaring global LNG prices, U.S. domestic gas (Henry Hub) remains stable and driven by local fundamentals. This is because U.S. LNG export terminals are already operating at maximum capacity, exporting about 20% of production. Without the ability to ship more gas abroad, global price increases do not create upward pressure on domestic prices.
Strong underlying drivers for gold—such as U.S. fiscal risks and geopolitical fracturing—remain intact. However, the rally has stalled because investors are currently focused on worries about energy-driven inflation and the Federal Reserve's potential reaction. The market is awaiting macro clarity before resuming its upward trend, indicating a temporary pause, not a reversal.
Unlike gold, silver faces a "valuation issue" due to its changing physical market dynamics. The market is moving from a period of sharp deficits into a balanced state this year and a surplus next year. While it won't entirely decorrelate from gold, this fundamental shift in supply and demand suggests its potential for upward price movement is more limited.