(Kitco NewsWire) - Spot gold and silver prices were sharply lower in late U.S. trading Wednesday, as Federal Reserve minutes kept another year-end rate increase on the table while elevated long-end Treasury yields and a firmer dollar pressured non-yielding metals. At the time of writing, spot gold was trading near $4,109.90 an ounce, down 1.28% on the session, while spot silver was trading near $59.670, down 2.55%.
North American equities closed lower as yields climbed worldwide and pulled major indexes back from record highs. The S&P 500 fell 17.16 points, or 0.2%, to 7,801.77. The Dow Jones Industrial Average dropped 341.41 points, or 0.7%, to 51,179.87. The Nasdaq Composite lost 61.20 points, or 0.2%, to 27,538.69, while the Russell 2000 fell 37.09 points, or 1.3%, to 2,793.20.
European equities also closed sharply lower as rising oil prices, higher bond yields and French fiscal stress hit banks and cyclicals. The Stoxx Europe 600 fell 1.00% to 630.25. Germany’s DAX lost 1.35% to 25,104.36, France’s CAC 40 dropped 1.22% to 7,769.21, the U.K. FTSE 100 declined 0.80% to 10,457.38 and Italy’s FTSE MIB fell 2.51% to 49,972.25.
Market positioning remains less hawkish for October but still exposed to December tightening risk. September payrolls rose by just 29,000, the unemployment rate held at 4.2%, average hourly earnings rose 0.1% on the month and July and August payrolls were revised down by a combined 60,000, reducing the urgency for an October move. However, Monday’s ISM services prices index rose to 74.0, the Fed minutes indicated most officials still expect another hike by year-end and the 10-year Treasury yield reached 5.36% before easing to the 5.28% area after a strong $39 billion 10-year note auction. The sale cleared at 5.30% with a 2.77 bid-to-cover ratio, helping stabilize bonds but not enough to reverse the pressure on gold.
The next tests are weekly jobless claims Thursday at 8:30 a.m. ET, the $22 billion 30-year Treasury auction Thursday, preliminary October consumer sentiment Friday at 10:00 a.m. ET and September CPI next week. Softer labor or inflation data would help bullion by validating the payroll slowdown; stronger inflation expectations or weak long-bond demand would keep the yield channel pointed against metals.
The Strait of Hormuz and U.S.-Iran situation remains unresolved, but the immediate oil-market impact turned less inflationary by the close. Maritime-security sources tracked at least 12 attacks on oil, LNG and LPG tankers around Hormuz during the week of Sept. 28-Oct. 5, the highest weekly total since the Iran war began, and a Panama-flagged tanker was hit while transiting the waterway. Still, oil settled lower as traders focused on recovering Middle East flows, accelerated emergency stock releases and expectations that about 90% of Hormuz flows are still moving. Brent crude settled at $100.20 a barrel, down 0.4%, while WTI settled at $88.28, down 1.3%. Lower crude reduces the immediate inflation impulse behind yields and the dollar, but persistent tanker attacks, insurance costs and Gulf routing risk keep a defensive bid under gold and leave energy volatility inside the Fed reaction function.
The key outside markets see Nymex WTI crude oil prices lower and trading near $88.28 a barrel, while Brent crude settled near $100.20. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.3% 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 $4,118.19 to $4,151.29 resistance zone, with a sustained move targeting $4,199.06 and then $4,230.51. Bears’ next near-term downside price objective is a break below $4,103.52, with deeper downside targets at $3,996.06 and then $3,942.10. First resistance is seen at $4,118.19 and then at $4,151.29. First support is seen at $4,103.52 and then at $3,996.06.
Spot silver bulls’ next upside price objective is to drive prices back above the $60.451 to $61.162 area, with a move above that zone targeting $62.046 and then the 50-day moving average near $64.210. The next downside price objective for the bears is a break below $58.880, with deeper downside targets at $57.000 and then the $55.000 to $56.000 zone. First resistance is seen at $60.451 and then at $61.162. Next support is seen at $58.880 and then at $57.000.
See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.
