Heraeus: Gold Prices Pulled in Both Directions, Fresnillo's Silver Production to Decline in 2026

Forex.com, October 27 - Analysts at German precious metals institution Heraeus stated that the current gold price is at a stalemate: rising oil prices are putting pressure on gold, while falling real yields are providing some support; meanwhile, the world’s largest primary silver producer saw a decline in silver output in the first three quarters of 2026.

Analysts at German precious metals institution Heraeus stated that the current gold price is at a stalemate: rising oil prices are putting pressure on gold, while falling real yields are providing support; meanwhile, the world’s largest primary silver producer saw a decline in silver output in the first three quarters of 2026.

In the latest market commentary, analysts pointed out that gold is caught between rising crude oil prices and falling US Treasury yields, leading to a standstill in price movement.

“After the Houthis attacked Saudi facilities again, Brent crude oil prices rose above $110 per barrel. In addition, despite US sanctions, Iran had been supplying floating crude oil inventories to Chinese refineries, but those stocks were depleted by mid-October,” analysts said. “The price for crude oil contracts settled a year later is about $89 per barrel, indicating the market sees a significant short-term risk premium and that supply disruptions may extend into next year. For gold, persistently high oil prices keep pushing up inflation risk, and the market has already priced in expectations for a Federal Reserve rate hike in December, offsetting traditional safe-haven demand driven by geopolitical risks.”

Analysts noted that while the drop in US Treasury yields has offset some of the pressure from rising oil prices, it is not strong enough to push gold prices higher. “Due to AI sector overvaluation, large financing needs, and concerns over investment returns, funds have flowed into US Treasuries, with the 10-year yield dropping from about 5.35% earlier this month to around 5.0%. The real yield on inflation-protected US Treasuries (TIPS) also fell from above 2.9% to nearly 2.6%.”

“Falling yields lower the opportunity cost of holding gold, but US Treasury yields remain at historic highs and the US dollar stays strong, attracting some safe-haven flows away from gold,” the analyst explained. “Therefore, even with a bond rally, gold has fallen back to around $4,000 per ounce. Only if oil prices continue to fall, combined with lower US Treasury yields, will a more favorable environment for gold emerge; otherwise, if Brent crude remains strong, inflation and rate hike pressures will continue to suppress gold prices.”



Additionally, Russia continues to sell its gold reserves to ease federal fiscal pressure. “In September, the Bank of Russia sold approximately 6 tons of gold, marking the tenth consecutive month of reduction. After the sale, the reserves totaled about 2,260 tons—the lowest since 2019.” The report noted, “Since December last year, Russia’s gold reserves have shrunk by around 62 tons, already exceeding the net reduction of about 50 tons during the 1998 Russian financial crisis.”

Analysts stated that despite continued gold sales by Russia and Turkey, central banks’ net global gold purchases still reached 170 tons from January to August. “The trend of central banks increasing gold reserves remains intact, with Russia as an exception: its current need to use reserve assets surpasses its willingness to accumulate gold.”

Spot gold is trading near the intraday high, quoted at $4,019.66 per ounce, up 0.59% on the day.



Turning to the silver market, Heraeus analysts mentioned that Fresnillo’s third-quarter silver production dropped.

“Attributable silver output reached 10.3 million ounces, down 5.5% quarter-on-quarter from 10.9 million ounces and 11.6% year-on-year from 11.7 million ounces,” the report showed. “Lower ore grades at the Juanicipio, Saucito, and San Julián mines were the main reasons for the production drop; year-on-year declines were also compounded by the expiration of contributions from the Silverstream project. Among them, Juanicipio saw the sharpest fall, with attributable silver output plunging 26% year-on-year to 1.8 million ounces, while the main Fresnillo mine’s output grew by 5% year-on-year to 2.5 million ounces.”

This world’s largest primary silver producer’s total output for the first nine months of the year stood at 32.4 million ounces, down 11.5% year-on-year. “The company maintains its full-year guidance between 42 and 46.5 million ounces. To reach the lower end of this range, fourth-quarter silver output would need to be 9.6 million ounces. At this level, Fresnillo’s production accounts for about 5% of global mined silver supply, with the 2025 global mined silver total projected at 84.66 million ounces.”


On market performance, Heraeus noted that the silver price fell below $55 per ounce, breaking the July low. “Currently, silver has pulled back over 20% from the late-August rebound high near $70, and last week’s rally quickly faded,” the analyst commented. “If silver holds below $55, it signals a further weakening price trend; the next key psychological support lies at $50 per ounce.”

Spot silver is quoted at $54.109 per ounce during the session, up 0.37% on the day.