A research report recently released by Metals Focus, an independent precious metals consultancy headquartered in London, UK, shows that gold and silver are both absorbing heavy selling pressure from high interest rates and climbing US Treasury yields, but silver is also weighed down by weakening investment demand and rising available physical inventories, and could therefore continue to underperform gold.
Analysts at Metals Focus stressed in the report that as the physical market softens, silver's price performance relative to gold could further lean toward a weakening decline. Gold has held a key support level around $4,000 per ounce, but silver has fallen to a low for the year. Metals Focus analysts said on Thursday that weakening investment demand and improving physical market liquidity are pressuring prices, and silver could face further selling pressure.
In its latest precious metals report, Metals Focus said silver's underperformance has pushed the gold-silver ratio above the 76 level for the first time since last December, briefly trading beyond that mark and above the 60 to 70 range that prevailed for most of this summer. Although the ratio remains below its 2020-2025 average of 82, analysts at the firm believe the gold-silver ratio still has room to rise further as silver continues to face major headwinds.
The report said central bank gold purchases and allocations by long-term investors seeking protection against geopolitical and macroeconomic uncertainty have helped support gold prices; by contrast, silver is more vulnerable to industrial demand and speculative investment fund flows. Metals Focus said the severe liquidity constraints that once drove silver to record highs in 2025 and early 2026 have now largely faded.
The firm noted that London vault silver inventories had risen to 932 million ounces by the end of September, the highest level in nearly four years. More importantly, analysts said, available inventories after excluding metal held by physically backed ETFs have increased to 267 million ounces, nearly double the low seen in October 2025.
On Thursday, stronger-than-expected US GDP data and the Federal Reserve's preferred inflation gauge — core PCE inflation — remaining near multi-year highs reinforced expectations that US interest rates and the 10-year Treasury yield curve will continue to rise in the future, sending gold and silver futures lower. Tadeu Dos Santos, a senior analyst at Infinox, said in a report: "The market continues to price in a December rate hike and further tightening after the end of the year, which supports yields and pressures gold." He added: "Elevated oil prices continue to fuel inflation and could further reinforce restrictive monetary policy."
Gold Holds $4,000, But Bottom Confidence Remains Elusive: Rate Hike Expectations Cap Rebound Space
Global central bank gold buying and long-term safe-haven allocations provide gold with a more solid demand base relative to silver; however, cautious views from JPMorgan Private Bank and UBS's precious metals sales desk indicate that buying around $4,000 is not enough to prove that gold prices have completed their adjustment. What the market currently lacks is the sustained momentum created by expectations that rates have peaked and financial investors rebuilding positions.
On the latest data for gold and silver prices, recent gold action reflects this pattern of "support present, rebound weak" — gold prices plunged on October 22, spot gold fell below $4,000 during the session on October 23, touching a roughly three-month low; although a repair followed, COMEX near-month November gold futures still fell 0.5% on October 29 to settle at $4,017.70 per ounce, and in Friday's (October 30) Asian session spot gold again fell below the $4,000 mark, currently fluctuating repeatedly around $4,004 to $4,005. On the same day, October 29, November silver futures fell 2.4% to $52.191, setting the lowest settlement price since November 25, 2025. Gold is still repeatedly fighting for a key threshold, while silver has already moved further downward in search of support.
Macro constraints have not disappeared with the Fed's rate hike pause. On October 28, the Federal Reserve kept its policy rate at 3.75%-4%; the subsequently released US third-quarter real GDP grew at a 3.4% annualized pace, higher than the second quarter's 2.2%. Economic resilience combined with energy inflation has kept the market trading the possibility of further tightening in December and beyond. For gold, the safe-haven and inflation-hedge demand driven by rising oil prices may be partially offset by higher rates, a stronger dollar, and the cost of financing positions; especially when policy tightening pushes up real rates and long-dated US Treasury yields beyond 10 years, the relative appeal of non-yielding gold is suppressed.
The cautious judgment of Yuxuan Tang, head of Asia rates and FX strategy at JPMorgan Private Bank, is based precisely on the fact that the peak in rates has not yet been clarified. The firm expects the Fed to continue raising rates in December and in the first quarter of 2027, with the 10-year Treasury yield potentially reaching 5.25%-5.5% by mid-2027, and therefore believes a gold bottom is still difficult to confirm and technical support below $4,000 is thin. In JPMorgan's view, it is not necessary to wait until the final rate hike is complete before buying; rather, the logic for cautious gold allocation rests on the fact that as long as the market continues to raise its peak yield expectations and delay the timing of the peak, gold rebounds are likely to encounter renewed opportunity-cost pressure.
UBS's precious metals sales desk explained from the perspective of fund behavior why rebounds have been slow to persist: with the year-end approaching, more clients prefer to protect annual returns and are less willing to actively increase risk exposure; at the same time, strong physical gold buying by global central banks, including China's central bank, still provides support. Jason Perl, a senior precious metals technical analyst at UBS, has turned bullish, but his repair path requires a break above $4,082.80 to further open the way toward about $4,400; on the downside, technical levels remain listed at $3,975.75, $3,923.24, and $3,870.74.
Silver Loses Its "Scarcity Premium"? Inventory Return and Fund Retreat Create Dual Pressure
The change silver now faces is not merely following gold lower, but rather that the physical tightness that previously supported prices is easing. Metals Focus pointed out that London vault silver inventories reached 932 million ounces by the end of September, the highest in nearly four years; the London Bullion Market Association's (LBMA) officially published figure of 28,985 tons, up 1.95% month-on-month, is consistent with that quantity. More critically, Metals Focus estimates that available inventories after excluding physically backed ETF holdings rose to about 267 million ounces, nearly double the low in October 2025.
The phrase "improved physical market liquidity" here refers to metal available for trading, leasing, or delivery becoming easier to obtain, and does not mean the financial system's financing environment has loosened. As ETFs reduce holdings and inventories flow back into the trading market, even if mine production does not rise substantially in tandem, marginal available supply may increase, weakening the price premium created by spot shortages and squeezes. Inventories excluding ETFs may still include metal held by other long-term holders and cannot all be regarded as immediately for sale, but directionally it does mean the previous degree of supply tightness has declined.
Weakening investment demand is reinforcing this process. Metals Focus forecast in its report that global physically backed silver exchange-traded product (ETP) holdings have decreased by about 60 million ounces since the start of the year. Fund exits not only weaken financial buying, but may also release metal previously held by investment products. At the same time, high prices are pushing industrial customers to reduce silver usage per unit of product or adopt substitute materials, with the photovoltaic sector particularly worth watching. The firm expects this year's silver supply-demand deficit to narrow further, possibly turning into a supply surplus in 2027.
Therefore, the gold-silver ratio breaking above 76 reflects the market's current choice more than simply observing the decline in silver prices: facing common interest rate pressure, investors are more willing to pay a premium for gold's monetary attributes and central bank demand, while silver simultaneously bears the impact of industrial demand, speculative funds, and changes in physical inventories. The 2020-2025 average gold-silver ratio of about 82 is only a historical reference, not a target that must be revisited; the gold-silver ratio could also continue rising in an environment where both gold and silver fall, with silver falling more.
In the view of the Metals Focus analyst team, gold has a relative defensive advantage, but a trend reversal still requires improvement in rate expectations and fund flows; silver must wait for investment demand to return and inventory pressure to ease before its rebound can become more sustained. Treating silver as "gold that has fallen more and is therefore cheaper" easily overlooks the diverging demand structures of the two metals.
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