Here’s the Reason Rising Oil Costs Are Impacting Precious Metals Mining Shares

Understanding the Fluctuations in Stock Prices

Stock values are constantly changing, and the underlying causes aren't always immediately clear.

The Connection Between Oil and Gold Prices

Oil and gold are both commodities typically traded in U.S. dollars. When the dollar strengthens, it increases purchasing power for these commodities; when it weakens, their prices tend to rise. As a result, one might expect oil and gold prices to move in sync with changes in the dollar’s value.

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Recently, however, this expected relationship has not held true.

Geopolitical Tensions: Iran, Oil, and Gold

On February 28, 2026, military action by the U.S. and Israel targeted Iran. This escalation led investors to seek safety in assets like gold, silver, and the U.S. dollar, which has appreciated about 2% against other currencies in the past three weeks—a trend that typically puts downward pressure on commodity prices.

In retaliation, Iran closed the Strait of Hormuz, restricting global oil shipments and causing oil prices to surge. Meanwhile, gold and silver prices, along with related mining stocks, have declined steadily for over a week.

Leading gold mining companies like Newmont Corp. (NYSE: NEM) and Barrick Mining (NYSE: B) have seen their shares drop by 15% and 16%, respectively, over the last seven trading sessions. Hecla Mining (NYSE: HL), the largest U.S. silver producer, is down 17%. These declines mirror the drop in gold and silver prices, which have fallen 10% and 16% over the same period.

But beyond their shared link to the dollar, how are gold and silver prices connected to oil?

How Rising Oil Prices Impact Precious Metals Stocks

Oil is a vital component throughout the global economy—not just as fuel for cars, but also for powering the ships and trucks that transport goods everywhere. When oil becomes more expensive, transportation costs rise, which in turn increases the price of nearly all goods and services.

This widespread increase in prices is known as inflation.

When inflation accelerates, the Federal Reserve is less likely to cut interest rates and may even raise them. Higher rates make borrowing more expensive for businesses, as they must pay more interest on their debt. For investors, rising rates make bonds more attractive compared to gold and silver, which do not generate interest income.

(While mining companies such as Barrick, Newmont, and Hecla do pay dividends, those payouts become less appealing as bond yields climb, resulting in a similar negative effect on their stock prices.)

In summary: Elevated oil prices fuel inflation, which leads to higher interest rates. This chain reaction is a key reason why precious metals stocks have been declining.

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Rich Smith does not own shares in any of the companies mentioned. The Motley Fool also holds no positions in these stocks. For more information, see the Motley Fool’s disclosure policy.