Gold-Silver Ratio Breaks 76! Gold's Tug-of-War at 4000 Offers No Clear Bottom; Silver Faces Dual Pressure from Inventories and Capital Flows

Metals Focus, an independent precious metals consultancy headquartered in London, UK, recently published a research report showing that gold and silver are both under significant selling pressure from high interest rates and rising US Treasury yields, but silver is also facing the additional drag of weakening investment demand and recovering available physical inventories, and may therefore continue to underperform gold. Metals Focus analysts emphasized in the research report that as the physical market weakens, silver's price performance relative to gold may further trend toward weak declines. Gold has held its key support level of about US$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 liquidity in the physical market are suppressing prices, and silver may 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 and briefly above that level, higher than the 60-70 range where it spent most of this summer. Although the ratio remains below the average of 82 during the 2020-2025 period, analysts from the institution believe the gold-silver ratio still has room to rise further as silver continues to face significant headwinds. The report said central bank gold purchases and allocations by long-term investors to hedge against geopolitical and macroeconomic uncertainty have helped support gold prices; by contrast, silver is more susceptible 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 institution noted that as of the end of September, silver inventories in London vaults had increased to 932 million ounces, 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 in October 2025. On Thursday, stronger-than-expected US GDP data and core PCE inflation datathe Federal Reserve's preferred inflation gaugeremaining near recent highs reinforced market expectations for continued increases in US interest rates and the 10-year US Treasury yield curve in the future, and gold and silver futures fell accordingly. Tadeu Dos Santos, a senior analyst at Infinox, said in a report: "The market continues to price in a December rate hike and further policy tightening after the end of the year, which supports yields and puts pressure on gold." He added: "Elevated oil prices continue to fuel inflation and may further reinforce restrictive monetary policy." Gold Holds US$4,000, But Bottom Confidence Still Not Secured: Fed Rate Hike Expectations Curb Rebound Space Global central bank gold purchases and long-term safe-haven allocations provide gold with a more solid demand base than silver; however, cautious views from J.P. Morgan Private Bank and UBS's precious metals sales desk indicate that buying near US$4,000 is not enough to prove that gold prices have completed their adjustment. What the market currently lacks is sustained momentum from expectations that rates have peaked and financial investors rebuilding positions. In terms of the latest data on gold and silver prices, recent gold price action reflects this pattern of "support existing, but rebound weak"gold prices fell sharply on October 22, and on October 23 spot gold broke below US$4,000 during intraday trading, touching a roughly three-month low; although there was subsequently some recovery, on October 29 COMEX nearby November gold futures still fell 0.5% and settled at US$4,017.70 per ounce, while in Asian trading on Friday (October 30) spot gold again moved lower and broke below the US$4,000 mark, currently fluctuating repeatedly around US$4,004 and US$4,005. On the same day, October 29, November silver futures fell 2.4% to US$52.191, setting the lowest settlement price since November 25, 2025. Gold is still repeatedly contesting the key threshold, while silver has already moved further downward in search of support. Macro constraints have not disappeared with the Federal Reserve's rate hike pause. On October 28, the Federal Reserve kept its policy rate at 3.75%-4%; subsequently released data showed US third-quarter real GDP grew at an annualized quarter-on-quarter rate of 3.4%, higher than 2.2% in the second quarter. Economic resilience combined with energy inflation has kept the market trading the possibility of further tightening in December and beyond. For gold, safe-haven and inflation-hedge demand brought by rising oil prices may be partly offset by higher interest rates, a stronger dollar, and financing position costs; especially when policy tightening pushes up real interest rates and long-term US Treasury yields of more than 10 years, the relative appeal of non-yielding gold will be suppressed. The cautious judgment of Yuxuan Tang, head of Asia rates and FX strategy at J.P. Morgan Private Bank, is based precisely on the fact that the peak in interest rates has not yet been clearly defined. It expects the Federal Reserve to continue raising rates in December and in the first quarter of 2027, and the 10-year US Treasury yield may reach 5.25%-5.5% by mid-2027, and therefore believes that a bottom for gold remains difficult to confirm and that technical support below US$4,000 is weak. In J.P. Morgan's view, it is not necessary to wait until the final rate hike is completed before buying; rather, the logic for cautious gold allocation lies in the fact that as long as the market is still raising its peak yield forecasts and delaying the timing of the peak, gold rebounds are likely to encounter new opportunity cost pressure. UBS's precious metals sales desk explained from the perspective of fund behavior why rebounds have been difficult to sustain: 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 the People's Bank of China, still provides support. Although Jason Perl, a senior precious metals technical analyst at UBS, has turned bullish, his recovery path requires a break above US$4,082.80 to further open the way toward about US$4,400; on the downside, technical levels of US$3,975.75, US$3,923.24, and US$3,870.74 remain listed. Silver Loses "Scarcity Premium"? Inventory Return and Capital Retreat Create Dual Pressure The change silver currently faces is not just falling in tandem with gold, but rather that the physical tightness that previously supported prices is easing. Metals Focus pointed out that silver inventories in London vaults reached 932 million ounces by the end of September, the highest in nearly four years; the London Bullion Market Association (LBMA) officially published figure of 28,985 tonnes, up 1.95% month-on-month, is consistent with this amount. More critically, Metals Focus estimates that available inventories after excluding physically backed ETF holdings increased to about 267 million ounces, nearly double the low in October 2025. The "improvement in physical market liquidity" here means that metal available for trading, leasing, or delivery is easier to obtain, and does not mean that financing conditions in the financial system have eased. As ETFs reduce holdings and inventories flow back into the trading market, even if mine production does not increase substantially at the same time, marginal available supply may increase, weakening the price premium formed by spot scarcity and short squeezes. Inventories excluding ETFs may still include metal held by other long-term holders and cannot all be regarded as immediately available for sale, but directionally it does indeed mean that 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 beginning 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 noteworthy. The institution expects the silver supply-demand deficit to narrow further this year and possibly turn into a supply surplus in 2027. Therefore, the gold-silver ratio breaking above 76 reflects the current market's choice more than simply observing the decline in silver prices: in the face of common interest rate pressure, investors are more willing to pay a premium for gold's monetary attributes and central bank demand, while silver is simultaneously affected by industrial demand, speculative funds, and changes in physical inventories. The average gold-silver ratio of about 82 in 2020-2025 is only a historical reference, not an inevitable mean-reversion target; the gold-silver ratio continuing to rise is also entirely possible 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 capital flows; silver must still wait for investment demand to return and inventory pressure to ease before it can strengthen the sustainability of a rebound. Treating silver as "gold that has fallen more and is therefore cheaper" easily overlooks the diverging demand structures of the two.