(Kitco News) – Gold prices are declining under the dual headwinds of multi-decade high bond yields and triple-digit oil prices, while the world’s largest silver-producing country saw a weak start to the third quarter, according to precious metals analysts at Heraeus.
In their latest update, the analysts noted that gold prices pulled back last week as macro headwinds drove the yellow metal through key technical support levels.
“Gold fell through support at around $4,250/oz, a level that had held through several tests during September, as elevated bond yields, a stronger dollar and high oil prices eventually outweighed buying interest around the level,” they wrote. “The price has since traded at around $4,100-4,200/oz, leaving the year-to-date lows around $4,000/oz as the next major area of support. The breakdown follows several weeks in which gold had proved relatively resilient despite an increasingly difficult macroeconomic backdrop.”
High oil prices are a significant part of that pressure, they said. “Brent traded at around $100/bbl for much of the week, reinforcing concerns that energy costs could keep inflation elevated and monetary policy tighter for longer,” the analysts said. “Diplomacy has offered little relief, with President Trump rejecting Iran's seven-day plan to reopen the Strait of Hormuz and Tehran now weighing a US counterproposal that would bring its nuclear programme into the initial steps. The 10-year Treasury yield climbed above 5.3%, its highest level since 2002, while the 10-year real yield moved above 2.9%, increasing the opportunity cost of holding non-yielding gold.”
Heraeus noted that Fed rate hike expectations for the October meeting eased considerably after Wednesday's PCE data and Friday’s employment report. “Headline personal consumption expenditures (PCE) held at 3.4% year-on-year in August and core at 3.0%, below expectations of 3.7% and 3.3%, respectively,” the analysts wrote. “The apparent decline was partly amplified by annual revisions, including methodology changes that lowered previously reported inflation. The lower-than-expected PCE number was reinforced when September non-farm payrolls came in at 29,000, much below the 90,000 expected.”
“Along with downward revisions to numbers for July and August, this led to the implied probability of a rate hike at the 28 October FOMC falling to around 17% on 2 October, compared with more than 70% early last week.”
They also highlighted a major development in the mining sector, as Northern Star ultimately rejected a takeover bid from Gold Fields that would have created the world’s second-largest gold producer.
“Gold Fields offered a proposal worth A$38.7 billion, equivalent to a 22% premium to Northern Star’s closing share price before the approach,” the analysts said. “Northern Star declined to engage further, saying the proposal undervalued the company. If completed, the combined group would have produced around 4.1 moz of gold in the 12 months to June 2026, equivalent to around 3.3% of 2025 global mine supply.”
“The approach illustrates consolidation pressure across the gold-mining sector as the producers seek greater scale and longer-life reserves.”
Spot gold continued to trade near session lows early in the early part of the North American session, and last traded at $4,135.54 per ounce for a loss of 0.12% on the daily chart.
Turning to silver, Heraeus analysts noted that while Mexico's monthly silver production edged higher in July, it remained below last year's level.
“Mexican silver production increased to 10.56 moz in July, up 1.7% from 10.38 moz in June, according to INEGI's latest survey-based statistics, although July's extra day means daily output was slightly lower,” they wrote. “Output also remained 2.3% below the 10.81 moz produced in July 2025. The wider Mexican mining and metallurgical sector's production grew by 3.8% month-on-month in July but remained 3.9% lower year-on-year on a seasonally adjusted basis.”
“Mexico remains the world's largest silver-producing country, accounting for around 20% of global mined supply in 2025, when it produced 172.9 moz out of a global total of 846.6 moz,” the analysts noted. “The Silver Institute expects Mexican mined supply to return to modest growth during 2026 after weaker output at several major operations last year.”
“With July's output the second-lowest monthly total in the past year and still below last year's level, the recovery is likely to remain uneven.”
Silver prices were also giving back some of their early-session gains on Monday morning.
Spot silver last traded at $60.987 per ounce for a gain of 1.02% on the daily chart.
