(Kitco NewsWire) - Spot gold and silver prices were sharply lower in early U.S. trading Monday, as a rebound in oil prices tightened the inflation narrative and reinforced expectations for another Federal Reserve rate increase. At the time of writing, spot gold was trading near $4,165.00 an ounce, down 2.78% on the session, while spot silver was trading near $61.290, down 4.49%.
Market positioning has shifted back toward higher-for-longer U.S. rates after stronger activity data, firm inflation expectations and renewed energy-price pressure pushed the policy-sensitive parts of the Treasury curve higher. Traders now see roughly a 68% to 70% chance of another Fed rate increase in October, while the dollar index traded near the 101 area and the 10-year Treasury yield was near the 5.2% area.
The data calendar is dense, with JOLTS job openings Tuesday at 10:00 a.m. ET, ADP private payrolls and August PCE inflation Wednesday, ISM manufacturing Thursday and the September nonfarm payrolls report Friday. Stronger inflation or labor-market data would keep upward pressure on yields and the dollar, weighing on gold, while softer prints would test whether Monday’s break below $4,200 has gone too far.
The Strait of Hormuz and U.S.-Iran situation is back at the center of the cross-asset trade. President Donald Trump rejected Iran’s proposal to reopen the strait and end the fighting, leaving talks in stalemate even as additional discussions are expected this week. Brent crude rebounded more than 3% to around $108.30 a barrel, while WTI traded near $95.93, with the jump in crude feeding inflation concerns and supporting Fed hike pricing. The impact on gold remains split: geopolitical risk supports defensive demand, but higher oil is lifting yields and the dollar, raising the opportunity cost of holding non-yielding bullion.
Global risk appetite weakened before the U.S. open. S&P 500 futures were down 0.5% and Nasdaq futures fell 1.0% as higher oil and higher yields weighed on growth and technology shares. European equities were firmer, with the Stoxx 600 up 0.1% on oil-and-gas strength, while Chinese blue chips slid 1.9% overnight to a one-year low. The 2-year Treasury yield was up about 5 basis points at 4.914%, while the 30-year yield held near 5.52% after reaching its highest level since 2004 last week.
The key outside markets see Nymex WTI crude oil prices higher and trading near $95.93 a barrel, while Brent crude was near $108.30. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.2% area. The U.S. dollar index is firmer. (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 $4,199.00 to $4,223.90 resistance zone, with a sustained move targeting $4,244.00 and then $4,257.00. Bears’ next near-term downside price objective is a break below $4,162.69, with deeper downside targets at $4,152.00 and then $4,128.00. First resistance is seen at $4,199.00 and then at $4,223.90. First support is seen at $4,162.69 and then at $4,152.00.
Spot silver bulls’ next upside price objective is to drive prices back above the $62.350 to $63.150 area, with a move above that zone targeting $64.080 and then $64.820. The next downside price objective for the bears is a break below $60.890, with deeper downside targets at $60.830 and then the $60.000 area. First resistance is seen at $62.350 and then at $63.150. Next support is seen at $60.890 and then at $60.830.
See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
