Gold and Silver Weather a Perfect Storm as Demand Holds Firm

Gold and silver can recover as October’s price declines reflected a positioning and liquidity reset while physical and investment demand remained resilient.

• Gold fell 6.80% to $3,874.62 per ounce by October 31, while gold ETF holdings rose to 100.97 million ounces and exceeded their February 2026 high.
• Silver dropped 18.74% to $49.10, yet silver ETF holdings increased by 4.85 million ounces, and the gold-to-silver ratio approached 79.
• The macro backdrop was unusually hostile: the U.S. 10-year real yield reached 2.96%, the dollar remained near a 52-week high, and French 10-year yields exceeded 5% as spreads over German Bunds reached a record 174 basis points.
• The report identifies Chinese physical demand, commercial buying, and central-bank demand as resilient, with a -0.97 correlation between Western positioning and Shanghai premiums indicating that Chinese buying absorbed Western selling.
• Energy and credit stress increased stagflation risks, with Brent reaching $116.72 per barrel, tanker costs reaching $20 to $35 per barrel on some routes, and war-risk insurance adding $7 to $8 per barrel.

Takeaway: Cleaner systematic positioning and sustained physical demand could support gold and a catch-up move in silver if real yields and broader financial stress ease, although inflation, fiscal pressure, and sovereign risk remain significant constraints.