Analysts at German precious metals firm Heraeus say gold prices are currently trapped in a tug-of-war: rising oil prices are weighing on bullion, while falling real yields are offering support; at the same time, the world's largest primary silver producer saw its silver output decline in the first three quarters of 2026.
Gold Caught Between Bulls and Bears: High Oil Prices Offset the Tailwind from Falling U.S. Bond Yields
In their latest market commentary, the analysts noted that gold is stuck between two opposing forces — climbing crude oil prices and declining U.S. Treasury yields.
"After Houthi forces once again attacked Saudi facilities, Brent crude climbed back above $110 per barrel. In addition, despite the U.S. blockade, Iranian floating storage crude had been continuously supplying Chinese refiners, but that inventory was exhausted by mid-October," the analysts said. "Forward crude contracts for delivery one year out are priced at around $89 per barrel, indicating the market believes there is a significant short-term risk premium and that supply disruptions may persist into next year. For gold, elevated near-term oil prices continue to stoke inflation risk, and the market has fully priced in a Fed rate hike in December, offsetting the traditional safe-haven buying support from geopolitical tensions."
The analysts said the pullback in U.S. Treasury yields has offset some of the pressure from higher oil prices, but not enough to drive gold higher. "Affected by excessive valuations in the AI sector, massive financing needs and concerns about investment returns, capital has flowed into Treasuries, pushing the 10-year Treasury yield down from around 5.35% earlier this month to near 5.0%. The real yield on Treasury Inflation-Protected Securities (TIPS) has also fallen from above 2.9% to close to 2.6%."
"Falling yields reduce the opportunity cost of holding gold, but U.S. Treasury yields remain at historically high levels, the dollar stays relatively strong, and Treasuries are also diverting safe-haven flows," the analysts explained. "As a result, even with a bond market rally, gold has still retreated to around $4,000 per ounce. Only a sustained drop in oil prices combined with falling Treasury yields would create a more favorable combination for gold; conversely, if Brent crude remains strong, inflation and rate-hike pressures will continue to weigh on gold prices."
Russia Keeps Selling Gold Reserves, But the Broader Trend of Central Bank Buying Remains Intact
Separately, Russia continues to sell down its gold reserves to ease federal fiscal pressure. "Russia's central bank sold about 6 tonnes of gold in September, the tenth consecutive month of reductions. After the sales, reserves stand at about 2,260 tonnes, the lowest since 2019," the report said. "Since last December, Russia's gold reserves have shrunk by a cumulative 62 tonnes, already exceeding the roughly 50 tonnes of net selling seen in the entire 1998 Russian financial crisis."
The analysts said that despite continued selling by Russia and Turkey, net central bank gold purchases still reached 170 tonnes in the January-August period. "The global trend of central banks adding to gold remains intact; Russia is a special case: its need to deploy reserve assets now exceeds its willingness to add to gold."
Spot gold was trading near its intraday high, quoted at $4,019.66 per ounce, up 0.59% on the day.
Fresnillo's Silver Output Falls Notably as Ore Grades Decline Across Multiple Mines
Attention now turns to the silver market. Heraeus analysts noted that Fresnillo saw its silver production decline in the third quarter. "Attributable silver production was 10.3 million ounces, down 5.5% quarter-on-quarter from 10.9 million ounces and down 11.6% year-on-year from 11.7 million ounces," the report data showed. "Lower ore grades at the Juanicipio, Saucito and San Julian mines were the main drivers of the decline; the year-on-year drop was compounded by the expiration of contributions from the Silverstream project. The decline at Juanicipio was particularly pronounced, with attributable silver production plunging 26% year-on-year to 1.8 million ounces, although output at Fresnillo's main mine rose 5% year-on-year to 2.5 million ounces."
The world's largest primary silver miner produced a total of 32.4 million ounces in the first nine months of the year, down 11.5% year-on-year. "The company's full-year production guidance remains in the range of 42-46.5 million ounces. To reach the lower end of that guidance, it would need to produce 9.6 million ounces of silver in the fourth quarter. At that level, Fresnillo accounts for roughly 5% of global mine silver supply, with total global mine silver production in 2025 at 84.66 million ounces."
Silver Breaks Down, Next Support Seen at the $50/oz Threshold
On price action, Heraeus noted that silver fell below $55 per ounce, breaking beneath its July low. "Silver is now more than 20% below its late-August rebound high near $70, and last week's rally proved short-lived," the analysts said. "If silver holds below $55, it would signal further weakening in the price trend; the next key psychological support level is $50 per ounce."
Spot silver was quoted at $54.109 per ounce, up 0.37% on the day.
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