(Kitco NewsWire) - Spot gold and silver prices are sharply lower ahead of the North American market open Thursday, as firmer Treasury yields, a steadier U.S. dollar and renewed Strait of Hormuz risk outweighed support from this week’s softer inflation data. At the time of writing, spot gold was trading near $3,975 an ounce, down about 2.1%, while spot silver was trading near $55.90, down about 3.3% on the session.
Gold’s early range was $3,973 to $4,067, with the metal setting a fresh session low and breaking below the $4,000 area for the first time in the current pullback. Silver’s early range was roughly $55.80 to $58.04, with the metal extending its break below the $57.15 demand zone and trading well below the $58.97 and $60.45 moving averages.
Positioning after the latest economic data has shifted away from the immediate dovish reaction to CPI and PPI. Headline CPI fell 0.4% in June and final-demand PPI fell 0.3%, but this morning’s retail sales and jobless claims data showed the economy has not rolled over. Retail sales rose 0.2% in June, in line with expectations, while initial jobless claims fell by 8,000 to 208,000, the lowest level in 10 weeks and below expectations near 218,000. The result is a less one-sided rates trade: markets still see the Fed holding rates at the July 29 meeting, with hold odds near 90%, but the 10-year Treasury yield was back near 4.57%, the 2-year yield was near 4.16% and DXY was edging higher near 100.54. That leaves gold supported by softer inflation, but capped by resilient consumer data, low layoffs and firm yields.
The Strait of Hormuz situation is best characterized as open transit under severe military pressure and blockade risk, not a normalized shipping environment. The U.S. expanded strikes into northern Iran and disabled a tanker it said was trying to breach the blockade, while Iran continued missile and drone attacks against U.S.-allied targets in Bahrain, Jordan and Kuwait. Oil prices rose again, with Brent near $86 and WTI near $80.70, as traders priced the risk of further disruption around the waterway. For gold, the impact remains two-sided: Hormuz risk supports defensive demand, but higher oil prices revive inflation concerns, keep yields firm and limit bullion’s upside. For broader markets, the trade is oil bid, bonds under pressure, dollar firmer and silver underperforming gold.
Traders are watching follow-through in Fed-rate expectations after the retail sales and jobless claims data, Fed commentary and any further disruption to Hormuz shipping lanes. A sustained move lower in yields would give gold a cleaner path back toward the $4,070 to $4,103 resistance area, while another crude-oil spike would keep the market focused on whether energy inflation can offset the softer June CPI and PPI prints.
The key outside markets see Nymex WTI crude oil prices firmer and trading around $80.70 a barrel, while Brent crude was near $86.00. The U.S. dollar index is firmer and trading near 100.54. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.57% area.
Technically, spot gold bears have the overall near-term technical advantage as prices broke below $4,000 and tested the $3,973 area, putting the triple-bottom support zone near $3,959 back in play. Bulls' next upside price objective is to push prices back above $4,044, with a sustained move targeting the 50-period moving average near $4,094 and then $4,140. Bears' next near-term downside price objective is a break below $3,959, with deeper downside targets at $3,942 and then $3,886. First resistance is seen at $4,044 and then at $4,094. First support is seen at $3,973 and then at $3,959.
Spot silver bears have the overall near-term technical advantage as prices broke below $57.15 and moved toward the $56.50 stop area identified in the latest short-term setup. Silver bulls' next upside price objective is to drive prices back above $57.52, with a move above that level targeting $58.83 and then $60.41. The next downside price objective for the bears is a break below $56.50, with deeper downside targets at $55.60 and then $55.00. First resistance is seen at $57.52 and then at $58.83. Next support is seen at $56.50 and then at $55.60.
