(Kitco NewsWire) – Spot gold prices were slightly higher and spot silver prices were lower in early U.S. trading Wednesday, as renewed concerns about energy supplies through the Strait of Hormuz and persistent expectations for additional Federal Reserve tightening weighed on precious metals. Gold found some support from lower Treasury yields and defensive demand, while silver struggled to sustain Tuesday's recovery amid uncertainty surrounding industrial activity and the interest rate outlook. At the time of the latest verified morning price reading, spot gold was trading near $4,136.70 an ounce, up $12.60, or 0.31%, while spot silver was trading near $57.510, down $0.370, or 0.64%.
Market positioning remains divided between signs of weakening economic activity and stubborn inflation pressure. September consumer prices increased 0.6% on the month and 3.7% annually, while producer prices surged 1.3% and 6.3%, respectively. Despite those inflation surprises, traders continue to assign approximately an 83% probability that the Federal Reserve will leave interest rates unchanged at its Oct. 27-28 meeting. Expectations for another rate increase remain concentrated in December, with futures indicating roughly a 94% probability that rates will be higher by the Dec. 9 meeting. The benchmark 10-year Treasury yield was trading near the 5.1% area Wednesday morning, down from recent highs above 5.3%, as weaker housing activity and concerns about financial-market stability supported government bonds. The dollar's broader resilience and the prospect of additional Fed tightening continue to limit gold's upside potential despite some relief from lower yields.
The Federal Reserve remains in its premeeting communications blackout, leaving incoming economic releases and energy-market developments as the principal drivers of interest rate expectations. Wednesday's calendar includes the weekly U.S. petroleum inventory report at 10:30 a.m. EDT and a 20-year Treasury bond auction at 1 p.m. EDT. Thursday brings weekly initial jobless claims at 8:30 a.m. EDT, followed Friday by preliminary October manufacturing and services purchasing managers' indexes at 9:45 a.m. EDT and the final University of Michigan consumer sentiment reading at 10 a.m. EDT. Softer employment and business activity figures could reinforce concerns about slowing growth and reduce December tightening expectations, supporting gold through lower Treasury yields and a weaker dollar. However, persistently elevated inflation expectations or renewed energy-price increases would strengthen the case for additional Fed tightening and maintain pressure on non-yielding bullion.
The Strait of Hormuz and U.S.-Iran situation remains a significant source of volatility in global energy and precious metals markets. Oil prices rebounded Wednesday following reports of additional attacks on commercial shipping in the strategic waterway, while Iranian Foreign Minister Abbas Araghchi signaled that prospects for a near-term peace agreement with Washington remain limited. The latest escalation followed Tuesday's sharp intraday reversal in crude prices amid conflicting reports about potential diplomatic negotiations. The underlying supply situation remains fragile despite a recovery in overall Middle Eastern crude exports. Regional oil shipments averaged approximately 24.6 million barrels per day in the week ending Oct. 18, exceeding the prewar average of 23.3 million barrels per day as producers expanded alternative export routes. However, shipments directly through Hormuz remained approximately 33% below prewar levels, while attacks on vessels and infrastructure continued to threaten the reliability of regional energy supplies. Brent crude climbed back above $110.00 a barrel Wednesday, reinforcing concerns about the inflationary consequences of a prolonged regional conflict.
For gold, continued uncertainty surrounding Gulf security supports defensive demand, but higher crude prices also reinforce inflation expectations and the prospect of restrictive U.S. monetary policy. This competing influence helps explain why bullion has struggled to sustain rallies despite the continuing geopolitical conflict. Silver faces similar interest rate headwinds, with its industrial exposure adding sensitivity to signs of weaker economic activity. The prospect of further Fed tightening, alongside uncertainty about the direction of oil prices, continues to complicate the near-term outlook for both metals.
Global equity markets were mixed to firmer before the U.S. open, with technology shares recovering amid a fresh round of corporate earnings. Nasdaq futures advanced approximately 0.4% and S&P 500 futures gained 0.2%, while Dow futures were little changed. Asian markets were generally firmer, with South Korea's Kospi gaining approximately 3.3% and Japan's Nikkei 225 advancing as investors returned to semiconductor and artificial intelligence-related shares. European markets were mixed, with the pan-European Stoxx 600 near unchanged, Germany's DAX slightly lower and France's CAC 40 posting modest gains. The U.K.'s FTSE 100 weakened amid pressure on mining shares. Investors are also assessing quarterly corporate results and the implications of elevated financing costs for technology-sector investment, while continuing fiscal uncertainty in France has kept European government bond markets under pressure.
The key outside markets see Nymex WTI crude oil prices higher and trading near $99.40 a barrel, while Brent crude was near $111.00. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.1% area. The U.S. dollar index is slightly firmer in early dealings, continuing to reflect expectations that U.S. monetary policy will remain restrictive despite recent evidence of slowing economic activity. (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 $4,154.00 to $4,180.00 resistance zone, with a sustained move targeting $4,199.00 and then $4,200.00. Bears' next near-term downside price objective is a break below $4,083.00, with deeper downside targets at $4,070.00 and then $4,053.00. First resistance is seen at $4,154.00 and then at $4,180.00. First support is seen at $4,083.00 and then at $4,070.00.
Spot silver bulls' next upside price objective is to drive prices back above the $57.860 to $58.370 resistance zone, with a move above that zone targeting $58.700 and then $60.835. The next downside price objective for the bears is a break below $56.920, with deeper downside targets at $56.720 and then $56.340. First resistance is seen at $57.860 and then at $58.370. Next support is seen at $57.390 and then at $56.920.
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