Precious metals analytics firm Heraeus stated that gold and silver surged sharply last week amid fading market expectations for Federal Reserve rate hikes, continuous gold buying by global central banks, and rising optimism over a deal to reopen the Strait of Hormuz. Nevertheless, new import restrictions in India are peRSIstently weighing on silver demand, adding extra pressure to its fundamental outlook.
Heraeus pointed out that gold posted its best weekly performance since January last week, climbing more than 7% in total, breaking out of the sideways trading range established in mid-June, and closing above $4,300 per troy ounce. Silver gained over 10% over the same period, also marking its strongest weekly rally since January.
The institution believes one key driver behind the rally is renewed market bets that the U.S. and Iran may strike an agreement to reopen the Strait of Hormuz. Such expectations pulled oil prices lower and dragged down market forecasts for real interest rates concurrently, improving the valuation backdrop for precious metals.
EASIng Rate Hike Expectations and Lower Oil Prices Boost Precious Metals
According to Heraeus, Brent crude dropped below $85 per barrel last week, after hitting $100 per barrel on July 23. Meanwhile, market wagers on a rate hike at the Federal Open Market Committee (FOMC) meeting on September 19 cooled noticeably.
Although investors still price in at least one more potential rate hike from the Fed this year, a smooth reopening of the Strait of Hormuz and further declines in oil costs would ease consumer inflation pressures, reducing the Fed’s incentive for additional policy tightening.
Against this backdrop, precious metals drew support from falling real rate expectations. For gold, lower interest rate outlooks reduce the opportunity cost of holding this non-yielding asset. Silver, with far higher price elasticity, tends to swing more violently amid rapid shifts in macro sentiment.
Spot gold briefly climbed near $4,365 per troy ounce overnight before retreating during the North American session, most recently trading around $4,355 per ounce, up roughly 0.35% on the day.
Sustained Central Bank Purchases Underpin Gold Prices
Beyond the improved macro landscape, peRSIstent gold accumulation by global central banks remains a vital medium-to-long-term pillar for bullion.
Citing official data, Heraeus reported that global official gold reserves rose by a net 51 tonnes in June, up from 41 tonnes in May and nearly double the 27-tonne monthly average over the prior 12 months, pointing to an accelerated pace of central bank buying.
Breaking down the buyers, Poland and China remained the top accumulators, adding 19 tonnes and 15 tonnes respectively; Uzbekistan purchased 9 tonnes, while Kazakhstan and Singapore each added 7 tonnes. Jordan and the Czech Republic also boosted their gold holdings.
At the same time, Russia and Turkey offloaded a net 9 tonnes and 2 tonnes respectively. Heraeus noted this divergence reflects split global central bank strategies: some keep diveRSIfying reserve assets via gold purchases, while others draw down gold reserves amid fiscal and financial strains.
Even so, official sector net purchases totaled 102 tonnes in the first half of 2026. Despite combined net sales of 127 tonnes by Turkey and Russia in the same period, aggregate central bank demand stayed positive, confirming official buying as a solid floor for the gold market.
Plunging Indian Imports Drag on Silver Fundamentals
While silver enjoyed a stronger short-term surge than gold, its fundamentals face far more pronounced demand headwinds.
Heraeus flagged abnormally weak silver imports into India in July, with the drop vastly exceeding normal seasonal fluctuations. Data showed India imported only 1.04 million ounces of silver in the month, a staggering 92% collapse from 13.8 million ounces in July 2025, and a marginal 3% uptick from June’s 1.01 million ounces.
The steep decline stems primarily from new Indian measures rolled out in May, including higher import tariffs on silver and mandatory government approval prior to shipments. The policies aim to curtail precious metals imports, conserve foreign exchange and ease pressure on the Indian rupee, yet they have drastically tightened domestic silver supply.
Heraeus explained that although July is traditionally a slow season, restricted inbound shipments have created domestic supply shortages and pushed up spot premiums in India. Dealers reported the domestic silver premium in India surged as high as $6.50 per ounce above the benchmark international price in early July.
India’s weight in the global silver market cannot be overstated. Heraeus noted over 80% of India’s silver demand relies on imports, and the country’s 210 million ounces of silver inflows in 2025 accounted for nearly 19% of worldwide total demand. Sustained depressed Indian imports could therefore erode a key pillar of global physical silver consumption.
In early Monday trading, silver continued to outperform gold and briefly attempted to retake the $65 per ounce mark. Spot silver last traded at $65.01 per ounce, up 2.3% intraday.
Overall, gold is currently buoyed by three overlapping drivers: dovish repricing of Fed hikes, falling crude oil prices, and relentless central bank accumulation, which will continue to support its medium-term trajectory. Silver boasts stronger near-term momentum, yet the substantial drag from Indian import curbs creates tangible fundamental constraints for its upside going forward.