Gold and silver are continuing their strong rebound following the Democratic Party's landslide victory in last week's midterm elections; however, Heraeus analysts believe that rising oil prices and the Federal Reserve's high expectations for interest rate hikes may put downward pressure on precious metals. Gold: Biggest One-Day Gain Since August After Falling Below $3,900 Heraeus noted in its latest report that gold prices rebounded quickly after hitting a new low for 2026 early last week. "Gold prices have fallen more than 15% from their late August highs, briefly dipping below $3,900/oz and breaking through the June lows near $3,950/oz," the report stated. "Then the Democrats swept both houses of Congress, triggering the biggest one-day gain for gold since August, pushing prices back above $4,000/oz." Oil Prices and the Fed: Two Major Negative Factors Suppressing Prices Heraeus mentioned that market expectations that a new Democratic-led Congress would accelerate the end of the Iran war caused Brent crude oil prices to fall nearly 9% in a single trading day. "However, the conflict continues, and Brent crude oil prices have rebounded above $95/barrel, while the new Congress will not convene until January," the analyst said. "Meanwhile, the Fed's policy remains headwind: Friday's non-farm payroll data showed 165,000 jobs, far exceeding market expectations of 65,000, strengthening the basis for another rate hike in December. Currently, the market is pricing in a 79% probability of a December rate hike." Central Bank Gold Purchases: 42% Year-on-Year Increase in Q3, 675 Tons Purchased This Year Exceeding the Same Period Last Year Heraeus pointed out that central banks around the world accelerated their gold purchases in the third quarter, pushing the cumulative purchase volume this year to exceed the pace of the same period last year. The World Gold Council estimates that central banks and other official institutions increased their gold reserves by 321 tons in the third quarter, 42% more than the same period last year and far exceeding the five-year quarterly average of 227 tons, the report stated. "This brings the total purchases for the first nine months of 2026 to 675 tons, 6% higher than the same period last year. However, only 120 tons of the third-quarter purchases are confirmed in the reported country-level data. Disclosed purchases were mainly by China and Poland, increasing their reserves by 63 tons and 40 tons respectively, while Kazakhstan and Uzbekistan each increased their reserves by 14 tons." "The increased gold purchases in the second and third quarters coincided with a pullback in gold prices from the first-quarter high; the continued increase in reserves even when gold prices were at historical highs indicates that strategic reserve diversification remains the main driving force." Silver Prices: Rebound After Hitting a New Low for the Year, Limited Upside Analysts noted that silver has shown strong performance after hitting its 2026 low last week. "Prices fell below $50/oz, hitting a new low for the year just below $49/oz, before rebounding to above $52/oz," the report stated. "However, silver remains well below the trading range of June and July, within which the previous year's lows were reached. The rebound so far has only recovered a small portion of the previous losses."