(Kitco News) – Gold prices are not seeing any safe-haven bid as a result of the latest round of conflict in the Middle East, while several key metrics show investor interest in silver is waning, according to precious metals analysts at Heraeus.
In their latest update, the analysts noted that gold recently overtook Treasuries as the most valuable central bank reserve asset.
“The ECB has estimated that globally gold represented 27% of official assets at the end of 2025, overtaking US Treasuries at 22%,” they wrote. “This is as a result of two factors: the increase in central bank holdings and the rise in the price of gold. Central banks began adding larger quantities of gold to their reserves from 2011, and the scale increased sharply in the last few years, with 863 tonnes in 2025 and more than 1,000 tonnes added annually from 2022 to 2024.”
Heraeus also pointed out that central banks are facing an inflation problem. “Inflation in the Eurozone was 3.2% in May, up from 3.0% in April,” they said. “Rising inflation with weak growth presents a difficult decision for the ECB, but the expectation is that interest rates will be raised at the meeting this week for the first rate hike since 2023. In the US, inflation rose sharply in April to 3.8% and the market is anticipating at least one rate increase by the end of the year.”
The analysts said that while the U.S. economy is performing better than that of the Eurozone, the second estimate of U.S. Q1 GDP came in at 1.6%, down from 2.0% in the initial reading. “This is still a clear improvement from the 0.5% rate in Q4’25,” they wrote. “However, the situation in the Middle East is still unresolved and the impact of the closure of the Strait of Hormuz will get worse the longer it takes to forge a peace deal. Some of the economic impact has been delayed by the release of oil reserves, but reserves are finite and if shortages of exports continue, this will ultimately drive prices higher.”
“If that causes an economic slowdown then in the near future central banks may be looking at cutting rates, not raising them, even if inflation is high,” they noted. “That would cause real rates to fall, which is typically a good environment for gold.”
Heraeus noted that “ongoing geopolitical tensions are not having a supportive price impact” after gold prices broke decisively through the $4,500 per ounce level last week. “Peace talks between the US and Iran appear to be ongoing, but it is unclear how advanced they really are and when a resolution may be achieved, as official announcements have often been contradictory and limited missile and drone strikes have occurred.”
Spot gold has seen a fair amount of volatility on Monday morning, last trading at $4,327.24 for a flat reading on the session.
Turning to silver, Heraeus analysts said Russia’s Natural Resources and Environment Minister is predicting massive silver output for 2026.
“Alexander Kozlov announced some extraordinary production estimates and forecasts for precious metals ahead of the St. Petersburg International Economic Forum (SPIEF),” they said. “For 2025, he put silver production at 2,600-2,800 tonnes, with 2,800-3,000 tonnes predicted for this year. Russian production figures have not been published since the war with Ukraine began in 2022. This estimate is much higher than the 1,800 tonnes estimated by The Silver Institute for 2025. He also made similarly outsized predictions for gold and PGMs of 480-500 tonnes and 134-137 tonnes (4.3-4.4 moz), respectively.”
“However, Nornickel, which produces the vast majority of Russian PGMs, has announced lower output this year of 3.1-3.2 moz of platinum and palladium,” they noted. “All the figures look too high considering what is known about primary supply, even if recycling figures were included.”
The analysts said that investor interest appears to be waning after silver ETF holdings fell by 5 million ounces in the first week of June, after falling by only 1.6 million ounces in May, while the Perth Mint sold 364,000 ounces of silver bars and coins in May, their lowest monthly total since April 2012.
Silver prices have also bounced around in a fairly wide $3 range on Monday morning.
Spot silver last traded at $67.857 per ounce for a gain of 0.15% on the daily chart.
