Gold and silver are being dragged lower by a renewed war-risk premium in oil, with economist Robin J. Brooks arguing that a further 10% jump in Brent crude could push gold down about 4% and silver 8%.
Gold and silver fall as Brent war premium rises
The call matters because it ties the precious-metals selloff not to rates or inflation alone, but to a geopolitical shock channel that is already showing up in energy markets. Brooks said Brent has climbed back to levels last seen when the Strait of Hormuz was closed, even though export flows from the Persian Gulf have normalized, leaving what he estimates as more than $25 a barrel of conflict premium embedded in current prices.
Sentiment Indicators
That premium has coincided with a sharp reset in bullion. Gold fell 3.7% on Friday, slipping clearly below $4,000 for the first time this year, while silver dropped 5.9%. In Brooks’s 30-day rolling correlation work, recent gains in oil have moved inversely with both metals, suggesting investors are treating the energy shock as the dominant macro driver rather than a safe-haven bid.
The market reaction has been reinforced by positioning and technical damage. GLD, the largest gold ETF, closed at 355.78 on Oct. 30, well below its 50-day moving average of 390.57 and 200-day average of 412.92, while its RSI fell to 26.5, a level that typically reflects oversold conditions. Silver proxy SLV sank to 44.6 on Oct. 30, with RSI at 18.8, while gold miners’ ETF GDX slid to 77.09, leaving all three under pressure as traders cut exposure.
Brooks said his estimate may overstate the downside because the oil market already carries a sizeable war premium and because recent price moves came during a period when gold and silver were unusually sensitive to crude. He also said the latest air-strike risk in the Iran conflict is now more expected than it was at the start of the year, which may limit the scale of any repeat selloff.
For investors, the message is that precious metals are no longer trading in isolation: the next leg in gold and silver may depend as much on Middle East escalation and Brent crude as on inflation, Treasury yields or central-bank demand. A de-escalation in conflict risk could let bullion recover, but another oil spike would likely keep pressure on both metals and miners.
| Entity | Gains | Losses |
|---|---|---|
| Oil bulls | ▲Higher war premium | ▼— |
| Gold and silver bulls | ▲Potential rebound if tensions ease | ▼Near-term downside from crude spike |
| GLD, SLV, GDX holders | ▲Oversold rebound potential | ▼Further drawdown if Brent rises |
| Importers and consumers | ▲— | ▼Higher energy costs and tighter purchasing power |
