Last week, the precious metals market staged a clear recovery. Following the U.S. midterm election results, news that Democrats won control of both the Senate and the House briefly lifted gold and silver prices, as risk-aversion built up during the election uncertainty unwound quickly and both metals rebounded from interim lows. However, the recovery in oil prices and rising expectations that the Federal Reserve would tighten policy again this year put fresh pressure on the short-term rally.

In gold, spot prices had previously retreated from their year-to-date highs, falling more than 15% from late-August peaks and briefly breaking below the $3,900-per-ounce mark, while also piercing support near the June lows around $3,950. After the election results were released, gold posted its largest one-day gain since August and reclaimed the $4,000 level. During Monday's Asian trading session, spot gold continued to move toward intraday highs, latest at $4,124.86 per ounce, up 1.30% on the day.

The factors behind the rally were not singular. The market broadly believes that shifts in the political landscape disrupted short-term risk aversion, while continued gold accumulation by central banks worldwide provides medium- to long-term support for prices. Industry statistics show that official-sector gold purchases accelerated markedly in the third quarter, with central banks and other official institutions adding about 321 metric tons in the quarter, up 42% from a year earlier and well above the five-year quarterly average of 227 tons. As a result, cumulative purchases over the first nine months of this year reached 675 tons, up 6% from the same period last year.

However, disclosed country-level data still show buying was relatively concentrated. China and Poland were the main buyers in the third quarter, adding 63 tons and 40 tons respectively, while Kazakhstan and Uzbekistan each increased holdings by 14 tons. Analysts said central bank buying in the second and third quarters was fairly synchronized with the period when gold prices pulled back from highs, but continued allocation to gold while prices remained in historically elevated territory suggests that reserve diversification and reducing dollar-asset risk remain the primary drivers.

Compared with gold, silver's rebound was more modest. Last week, silver briefly fell below $50 per ounce, setting a new year-to-date low under $49, before recovering above $52. In Monday's early session, spot silver approached intraday highs, latest at $52.682 per ounce, up 1.48% on the day. Although the short-term correction was notable, silver remained some distance below the prior range formed between June and July, with the rebound recovering only a small fraction of the earlier decline.

The silver supply side also drew attention. Hecla's third-quarter silver output was 4.17 million ounces, little changed from 4.21 million ounces in the second quarter but down 9% from 4.58 million ounces a year earlier. Lower production at the Greens Creek and Lucky Friday mines was partly offset by record output at Keno Hill. The latter's third-quarter production rose 54% from the previous quarter to 963,000 ounces on markedly improved head grade. Based on output of 16.10 million ounces, Hecla accounts for about 1.9% of global silver mine supply of 844.1 million ounces in 2026.

The market is also reassessing the impact of macro policy on precious metals. U.S. nonfarm payrolls data released last Friday showed employment increased by 165,000, well above market expectations of 65,000, reinforcing investors' view that the Federal Reserve will raise rates again in December. Market pricing currently puts the probability of a December rate hike at about 79%. Meanwhile, Brent crude recovered above $95 a barrel, partly offsetting the safe-haven buying for precious metals triggered by the election. Earlier, speculation that the new Congress could accelerate an end to the Iran conflict had pushed Brent down nearly 9% in a single day, but analysts noted that the conflict remains ongoing and the new Congress will not be formally seated until January, while rising oil prices could also cap further upside in precious metals.