(Kitco NewsWire) – Spot gold prices are firmer and spot silver prices are sharply higher in early U.S. trading Monday, as Friday’s weak U.S. payrolls report reduced the probability of an October Federal Reserve rate hike while elevated Treasury yields, a firm dollar and unresolved Strait of Hormuz risks capped gold’s rebound. At the time of writing, spot gold was trading near $4,154.60 an ounce, up 0.36% on the session, while spot silver was trading near $61.480, up 2.00%.
Market positioning remains centered on whether Friday’s jobs report was weak enough to pause the Fed’s renewed tightening cycle. September nonfarm payrolls rose by just 29,000, the unemployment rate held at 4.2%, average hourly earnings rose 0.1% on the month and 3.0% from a year earlier, and July and August payrolls were revised down by a combined 60,000 jobs. Traders now price an October pause as the base case, with the probability of no rate change near 82%, but still see a meaningful chance of a December increase as inflation remains above target and oil prices stay elevated. The 10-year Treasury yield is trading near the 5.26% area and the 30-year yield near the 5.61% area, keeping the rates channel a headwind for gold. The next tests are the S&P Global services PMI at 9:45 a.m. ET, ISM services at 10:00 a.m. ET, the September Fed minutes Wednesday at 2:00 p.m. ET, weekly jobless claims Thursday at 8:30 a.m. ET and October consumer sentiment Friday at 10:00 a.m. ET. Softer services employment or weaker sentiment would reinforce gold’s post-payroll bid; firmer prices-paid data or resilient services demand would keep yields and the dollar working against bullion.
The Strait of Hormuz and U.S.-Iran situation remains unresolved, but the immediate oil-market pressure is being partially offset by recovering Middle Eastern exports and coordinated stock releases. Crude prices fell early Monday as recovering regional flows, the Group of Seven’s planned release of emergency oil stocks and Saudi Arabia’s price cut for Asian buyers eased some supply fears. Brent crude remained above $100 a barrel, while WTI traded near the $90 area. The risk premium has not disappeared: several vessels were reported attacked around the coasts of Oman and Yemen, and analysts do not expect a preliminary U.S.-Iran deal before early next year. For gold, the transmission remains two-sided: lower crude reduces the inflation impulse behind yields, but unresolved shipping and security risks continue to support defensive demand.
Global risk tone was soft before the U.S. open. U.S. stock-index futures were lower, with Dow and S&P 500 futures down 0.2% and Nasdaq futures down 0.3%, as the Friday jobs-led equity rally faded and high bond yields remained the dominant cross-asset pressure point. European markets were mixed and major Asian markets were mostly higher, while Shanghai and South Korea were closed for holidays. The dollar remained firm enough to limit gold’s advance even as Fed expectations shifted less hawkish.
The key outside markets see Nymex WTI crude oil prices lower and trading near $90.68 a barrel, while Brent crude was near $102.91. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.26% area. The U.S. dollar index is firm. (Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.)
Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,160.00 to $4,190.00 resistance zone, with a sustained move targeting $4,214.00 and then $4,238.00. Bears’ next near-term downside price objective is a break below $4,112.00, with deeper downside targets at $4,073.00 and then $4,030.00. First resistance is seen at $4,160.00 and then at $4,190.00. First support is seen at $4,112.00 and then at $4,073.00.
Spot silver bulls' next upside price objective is to drive prices back above the $61.720 to $63.060 area, with a move above that zone targeting $65.090 and then $65.447. The next downside price objective for the bears is a break below $59.960, with deeper downside targets at $58.940 and then $57.640. First resistance is seen at $61.720 and then at $63.060. Next support is seen at $59.960 and then at $58.940.
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