Gold Holds USD $4,000 as Inflation Print Sees Silver Sell Off

Precious metal markets fell sharply overnight, after a mixed start to trading conditions in the first two weeks of October.

At the time of writing, gold is trading around USD $4,140 per troy ounce (oz), now marginally down from its September end of month close. In Australian dollar terms, the precious metal has fallen below AUD $6,000oz, a price point that has proved attractive to long-term accumulators.

Silver has been far softer, falling by almost 10% from approximately USD $62oz to just USD $56.20oz at the time of writing, with much of that fall seen in the last 24 hours.

The primary catalyst for the overnight fall was US inflation data, which overshot market expectations. Headline CPI rose 0.6% in September and is up 3.7% over the year, compared with expectations for annual inflation of 3.6%. Core also remains at problematic levels, rising from 2.4% to 2.6% on an annualised basis, with the price action after the CPI release again highlighting silver’s vastly higher volatility (which helps magnify both gains and losses) when compared to gold.

The largely sideways trading for gold, and the continued weakness in silver follows on from a very soft month for precious metals in September, with the gold to silver ratio sitting at 73.

The market continues to look soft and is looking to find clearer signs that the USD $4,000oz price point, which was temporarily breached in late July, will prove a more enduring floor, with bulls also hoping silver can soon stem losses, and hold USD $55oz.

Financial Markets Remain Resilient

Outside precious metals, financial markets have generally started October positively despite elevated and rising bond yields.

The S&P 500 rallied to more than 7,800 points by 12 October, an increase of about 1.8%, with the index trading close to record territory, though it gave back more than 1% in overnight trade, as higher than expected CPI spooked markets. Australian equities have also proved resilient, with the S&P/ASX 200 rising by approximately 2% so far this month, and trading above 8,750 points, though it has given up close to 0.50% in morning trade today.

While continuing to attract capital inflows, and delivering robust performance YTD, there are signs the exuberance in equity markets may be beginning to wane. South Korean stocks are weakening (down close to 14% MTD in October), while the high-profile cancellation of the planned Firmus IPO on the ASX have some wondering if the AI boom is peaking. The 15% fall in Coreweave overnight is adding to concerns around this sector of the market.

Meanwhile, bond markets remain the main game in town, with movements in yields almost certainly the more important macroeconomic signal. US 10-year Treasurys yield started the month trading close to 5.25%, with that number continuing to push higher in early October, though it has since eased somewhat.

Higher yields and a firmer US dollar continue have for many months created a challenging backdrop for precious metals, especially as the momentum (dare we say FOMO) that was pushing gold and silver higher into end January is now completely absent from the market.

Bitcoin has been comparatively subdued. After trading near USD $85,000 in early October, it was last trading closer to USD $81,000, leaving it modestly lower for the month so far, with investors showing little confidence or interest in crypto at this stage.

Closer to home, and the bigger news is the continued weakness in Australian property markets. Cotality reported that national dwelling values fell 1.1% in September, their sixth consecutive monthly decline. Sydney has been the epicentre of the pullback, and continues to deteriorate, though property price weakness has spread to encapsulate most capital cities and regions, with data indicating over 80% of suburbs nationwide saw price declines in the past three months.

The property price pullback, its implications for Australian more broadly, and gold’s ability to protect and grow wealth throughout this period of adjustment for our economy is a subject we will address in detail in the coming weeks through the release of a special ABC Bullion whitepaper on this subject.

Gold Investors Remain Bullish

Despite the major pullback in precious metal prices between end January and June, and the relatively subdued performance of bullion in the past three months, underlying investment demand for gold remains encouraging.

The World Gold Council reported that gold ETFs worldwide attracted US $10 billion in September, helping drive quarterly inflows to a record US $31 billion. Total ETF gold holdings increased to a record 4,256 tonnes, despite weakness in the gold price itself. That is an interesting tell, especially given it occurred against a backdrop of rising yields, strength in the USD and a continued equity market bull run, three things that you’d expect to sap demand from this segment of the precious metal market.

Central banks are still buying too, even if total net purchases for the year are likely to come in short of the near record levels of purchases we have grown accustomed too in the past four years, with recent news that the National Bank of Kazakhstan may lighten its holdings weighing on precious metal sentiment.

Meanwhile, delegates attending the London Bullion Market Association annual conference in Sorrento, Italy (that several of the team from ABC Bullion attended) remained firmly bullish.

The LBMA poll suggested gold would rise to just over USD $5,000oz over the next 12 months, versus closer to USD $4,170 at the time of the survey, while Oxford economics recently issued a USD $5,140oz price target for gold in 2028.

Silver expectations from the LBMA event were even more optimistic, with delegates forecasting a price closer to USD $97oz, versus around USD $61oz at the time the survey took place, though we have no doubt many bank and trading house forecasts will be trimmed in the weeks ahead given recent price action.

That would actually be a good sign for the market, as a lack of exuberance, indeed outright pessimism, are often seen when a market genuinely bottoms out.

The Long-Term Bull Market Remains Intact

Our view remains that the structural precious-metal bull market is intact, despite the correction that investors have endured for most of 2026. Elevated bond yields and US dollar strength remain the obvious near-term headwinds, and investors should expect continued volatility, the potential for one last leg lower in this cycle, and an uneven path back to all-time highs.

However, when one considers the continued need for portfolio diversification, persistent geopolitical uncertainty, growing risks in financial markets, elevated fiscal concerns, and still problematic levels of inflation, it is hard not to see that there is powerful long-term support for bullion.

For investors whose goals are measured in years, rather than days, weeks, or even months, we continue to believe that those buying gold at current levels near USD $4,000oz and AUD $6,000oz will be rewarded, with current price levels offering an attractive accumulation zone.

Until next time,

Jordan Eliseo
General Manager, ABC Bullion

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