Oil Is Flowing Again. What It Could Mean for Gold and Silver

by Donnie Dauria

Oil is flowing out of the Middle East once again. It is reported that shipments are close to 80% of where they were before the war began in February. That is good news for the world’s fuel supply. It could also be good for gold and silver. Here is how it all connects.

 

 

What's Happening With Oil?


On September 29, The Wall Street Journal reported that oil shipments from the Middle East are back up to nearly 80% of pre-war levels. That includes oil going through the Strait of Hormuz and oil sent around it on other routes. It is the highest level since February.

The Strait of Hormuz is a narrow waterway next to Iran. Before the war, about 1 in every 5 barrels of oil traded in the world passed through it. That was roughly 20 million barrels a day. The war started on February 28, when the U.S. and Israel began attacking Iran. Oil traffic dropped sharply after that.

The strait by itself is still behind the regional total. An oil tracking firm, Kpler, counted about 13.1 million barrels per day last week. Before the war, it was about 17.1 million.

Three things are helping oil move again:

  • Navy escorts. U.S. Navy ships are safeguarding oil tankers as they pass through the strait.
  • More Saudi oil. Saudi Arabia is shipping more crude.
  • Routes around the strait. Saudi Arabia’s East-West pipeline that carries oil to the Red Sea is running again. This avoids the strait.

In the spring, oil topped $120. Today it is close to $100 a barrel. That's still high, though. A year ago, the world’s main oil price, called Brent, was under $70.

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How High Oil Prices Pushed Interest Rates Up

When oil costs more, prices of almost everything rise with it. High fuel prices raise the cost of shipping, manufacturing, and farming, since trucks, planes, and farm equipment all need fuel.  

This year, high energy costs helped keep inflation above the Federal Reserve’s goal of 2%. To counter inflation, the Federal Reserve, or “the Fed,” raised interest rates. That’s how higher oil prices caused higher interest rates.

The Short-Term Impact of Interest Rates on Gold and Silver

When interest rates rise sharply, big investors like funds and banks often move money into bonds and savings to earn higher short-term returns. That can pull gold and silver prices down for a while. 

However, over the long term, the picture looks different:

  • Metals have tended to keep up with inflation. Over long periods, gold and silver have tended to rise along with the cost of living. The same inflation that pushes rates up today is what helps metals rise over time.
  • The past year still looks strong. Even after this pullback, silver is up about 28% from a year ago. That beats the S&P 500, which gained about 17%. Gold is up about 8%.
  • Rate pressure does not last forever. When the Fed stops raising rates, or starts cutting them, the pull toward bonds and savings eases. That is often when big banks and funds move money back into gold and silver. Many expect gold and silver to rise again when that happens - see table below.

The Case for Upside: What Experts Are Watching

So what may help gold and silver rise from here? Here are four things most analysts and industry groups are pointing to.

1. What big banks expect for gold and silver

Major banks expect gold and silver to climb from here. Here are their latest targets, compared with prices on September 30 (gold about $4,200, silver about $61):

Bank Metal Target Above today's price
Goldman Sachs Gold $4,900 by end of 2026 About 17%
Bank of America and Deutsche Bank Gold $4,800 by end of 2026 About 14%
UBS Silver $70 by December 2026 About 15%

 

UBS strategist Dominic Schnider forecasts higher prices for silver over the medium term (3-24 months). He points to strong demand from investors and industry, and short supply. Much of the world’s silver comes as a byproduct of mining other metals, like copper and zinc. That makes it hard for miners to produce it any more quickly.

2. Cheaper oil could take pressure off rates

Here is the chain of events. If more oil keeps flowing, energy prices could come down. Lower energy prices would be expected to lower inflation. As inflation cools, the Fed may reverse course on rates. Lower rates tend to push gold and silver prices higher.

We saw a small example of this on September 29. Weak reports on U.S. jobs and consumer confidence made traders less sure about another rate hike. That day, gold rose about 1.4% and silver rose about 1.2%, according to The Rio Times.

3. Central banks keep buying gold

Central banks are the banks that run each country’s money. Nearly all of them hold gold as part of their savings.

The World Gold Council, the gold industry’s main research group, says central banks bought 289 tonnes of gold from April through June. That was 62% more than the same months a year earlier. Poland and China were among the biggest buyers. The Council expects central banks to keep buying gold.

4. Silver is in short supply

Silver is not just for coins and jewelry. It is used in electronics, cars, and solar panels.

The Silver Institute tracks the silver market each year. Its 2026 report says the world will use more silver than it produces for the sixth year in a row. It expects a shortfall of about 46 million ounces this year. It also expects people to buy about 18% more silver coins and bars.

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Where Gold and Silver Stand Now

Prices per ounce, approximate.

Metal A year ago (Sep 2025) Record high (Jan 2026) Now (Sep 2026) 1-year change
Gold $3,860 $5,600 $4,200 +9%
Silver $47 $121 $61 +30%

 

The Fed's Next Decision Is on October 28th

On September 16, the Fed raised its key rate by a quarter of a percent. The new range is 3.75% to 4%. It was the Fed’s first rate increase since 2023. All 12 voting members agreed. It was also the first big move under the Fed’s new chair, Kevin Warsh.

The Fed pointed to inflation that is still too high, driven partly by energy prices. Most Fed officials now expect rates to end the year between 4.1% and 4.4%. That points to one more increase before 2027.

Oil prices are expected to have a major impact on the Fed’s next decision, on Wednesday, October 28.

What to Watch Next

  • Oil flow numbers. Trackers like Kpler and Vortexa report shipping data each week.
  • Inflation reports. The government’s monthly price reports show whether inflation is cooling.
  • The Fed’s October 28 decision. Will the Fed raise rates again, or hold steady?
  • Central bank gold buying. The World Gold Council’s next quarterly report comes out later this fall.

We will keep an eye on all of it and share updates here.

Sources:

 

Metalstacks is a private club focused on the study and discussion of the precious metals industry. The views, opinions, and forecasts expressed herein are solely those of the author(s) and are not intended to be a recommendation to buy, sell, or hold any specific metal, security, or investment product. The authors and the Metalstacks Precious Metals Club are not registered financial advisors, brokers, or dealers. Always consult with a qualified financial, investment, tax, or legal professional before making any investment decisions. Your personal financial situation and goals are unique. Investing in precious metals and related assets involves significant risk. The value of investments can fluctuate, and you may lose some or all of your principal investment. Past performance of any asset, including gold and silver, is not indicative of future results. By reading this article, you acknowledge and agree that you are solely responsible for your own investment decisions.

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