Recent reports show that the price of gold remains under pressure as rising crude oil prices fuel inflation concerns and strengthen expectations of tighter U.S. monetary policy, offsetting support from declining Treasury yields and geopolitical uncertainty.
A report compiled by Heraeus’ precious metals analysts found that Brent crude has also climbed above $110 a barrel following more Houthi attacks, while floating oil inventories in Iran were reportedly exhausted mid-this month amid a U.S. blockade.
Oil futures indicate that market participants expect some supply disruptions to persist into 2027, keeping inflation risks elevated and reinforcing expectations of a potential Federal Reserve rate hike in December. Although U.S. Treasury yields have declined, the move has provided limited support for gold.
The 10-year Treasury yield has declined from about 5.3% to around 5%, while the yield on inflation-protected Treasury securities has fallen to almost 2.6%. Lower yields generally make gold more attractive by reducing the opportunity cost of holding the non-yielding metal. However, elevated bond yields and a strong U.S. dollar continue to compete with gold for safe-haven investment.
Consequently, spot gold has struggled to sustain its gains, trading near $4,000 an ounce.
Analysts noted that a combination of falling oil prices and lower Treasury yields would create a more favorable environment for the precious metal, while persistent oil price strength could prolong inflationary pressures.
Meanwhile, Russia has continued selling gold from its reserves to support its federal budget. The country’s central bank reportedly sold around 6 tons of the precious metal last month, marking its tenth consecutive month of sales. Its holdings have declined to approximately 2,260 tons, their lowest level in almost a decade.
Despite these sales, central banks collectively remained net buyers of gold during the first eight months of this year.
In the silver market, production challenges at Fresnillo, the largest primary producer of silver globally, added to concerns about supply. The company produced 10.3 million ounces in Q3, which represents a 5.5% drop from the previous quarter and 11.6% year-on-year, largely due to lower ore grades at several mines.
Production for Q1-Q3 of this year fell by 11.5% to reach 32.4 million ounces. With annual guidance unchanged, the company must produce 9.6 million ounces this quarter to hit its target.
The price of silver has also weakened, falling below $55 an ounce and extending losses from its Q3 peak of $70. A sustained decline could expose the market to further downside, with $50 emerging as a key psychological support level. Latest data shows that spot silver last traded at $53.77 an ounce, representing a 0.24% drop.
Whether or not silver prices slide further will be the subject of intense scrutiny by silver ecosystem players like New Pacific Metals Corp. (NYSE American: NEWP) (TSX: NUAG).
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