Gold and Silver Prices Update
In early U.S. trading on Friday, spot gold prices saw a slight increase while spot silver prices experienced a notable rise. This uptick comes amidst falling oil prices fueled by renewed hope for a U.S.-Iran truce. However, the combination of elevated Treasury yields and expectations of further rate hikes from the Federal Reserve is contributing to a predicted weekly loss for bullion. At the point of writing, spot gold was priced around $4,300.00 an ounce, marking a 0.62% increase, whereas spot silver was trading near $64.760, reflecting a 1.62% gain.
The market appears to be adjusting to tighter monetary policy expectations, particularly after recent robust U.S. economic data. This includes a drop in jobless claims and stronger housing figures that have led many to believe that the Fed’s rate hike in September won’t be the last. Currently, traders see about a 71% chance of another 25-basis-point increase in October. The dollar index is floating around 101.2 after reaching a two-month high, and the yield on the 10-year Treasury note is hovering near 5.1%. In August, durable-goods orders remained nearly unchanged, following a downwardly adjusted 0.9% rise in July. This slightly outperformed the forecast of a 0.4% decline. Orders excluding transportation also showed some strength with a 0.3% rise after a 0.7% increase in July.
The situation in the Strait of Hormuz and the ongoing U.S.-Iran negotiations remain key risk factors for the oil market. Recent developments hint that diplomacy might be alleviating some of the supply concerns. Negotiators from the U.S. and Iran are discussing a phased approach to de-escalate the conflict, which could see Tehran reopening the Strait of Hormuz while Washington eases its economic blockade. In the meantime, Houthi attacks targeting Saudi Arabia continue to pose risks to regional oil supply. At last check, Brent crude was priced at approximately $105.26 a barrel, a 1.3% decrease, while WTI was around $92.78, down 1.9%. Lower crude prices may lessen the immediate inflationary impact affecting yields and the dollar, which could, in theory, be slightly positive for gold, though uncertainty around shipping risks continues to uphold demand for bullion.
Prior to the U.S. market opening, global equities appeared to be in a positive mood, driven largely by investments in AI, despite concerns regarding oil prices, yields, and risks in the Middle East. At 5:15 a.m. ET, Dow e-minis were up by 162 points (0.31%), S&P 500 e-minis gained 23.75 points (0.31%), and Nasdaq 100 e-minis rose by 188 points (0.61%). Both the S&P 500 and Nasdaq were positioned for weekly gains, led by technology and communications shares, although the prices of Brent above $100 and the 10-year yield at around 5.1% are curbing wider risk-taking.
Looking at the broader market dynamics, Nymex WTI crude oil prices are lower, trading near $92.78 a barrel, while Brent crude is at about $105.26. The yield on the benchmark 10-year U.S. Treasury note also sits close to the 5.1% mark. The U.S. dollar index has strengthened over the week but has fallen from its highs around 101.2.
On the technical front for gold, bulls aim to push prices back above the resistance zone of $4,304.00 to $4,345.00. A sustained move above these levels could lead prices toward $4,396.00 and potentially $4,400.00. Conversely, bears are looking for a break below $4,245.00, with deeper downside targets of $4,216.00 and a range between $4,181.00 to $4,216.00. The first resistance is noted at $4,304.00, followed by $4,345.00, while initial support levels are at $4,245.00 and then at $4,216.00.
For silver, bulls are targeting a return to the $64.920 to $65.830 zone, with a break above that potentially pushing prices towards $67.231 and $68.000. On the downside, bears aim for a break below $62.750, with further targets at $62.350 and $61.460. The first resistance is at $64.920 and then at $65.830, while support levels sit at $62.750 and then at $62.350.
