(Kitco NewsWire) - Spot gold prices were higher in late U.S. trading Wednesday, while spot silver recovered from earlier losses, as a softer U.S. dollar and easing crude oil prices provided some support for precious metals despite persistent inflation concerns and expectations for additional Federal Reserve tightening. Strong corporate earnings lifted major U.S. stock indexes, while unresolved tensions involving Iran and the Strait of Hormuz continued to complicate the outlook for energy prices and monetary policy. Gold was trading near $4,141.01 an ounce, up 0.66%, while silver was near $57.976, up 0.34%, in the latest available late-session market readings.
The latest U.S. economic reports continue to point to weakness in interest rate-sensitive sectors of the economy. September housing starts declined 5.2% to a seasonally adjusted annual rate of 1.221 million units, below expectations of approximately 1.305 million and down from an upwardly revised 1.288 million in August. Building permits slipped 0.2% to 1.400 million units, while single-family starts declined 4.6% to 859,000 units. Pending home sales fell 7.3% in September and 11.3% from a year earlier, reinforcing concerns that high mortgage rates and weakening household confidence are restraining residential investment. Wednesday's weekly U.S. petroleum inventory report also highlighted the continuing tightness in energy markets, with commercial crude oil stocks declining 3.1 million barrels to 412.5 million barrels, compared with expectations for a draw of approximately 300,000 barrels. Gasoline inventories fell 3.0 million barrels, while distillate stocks increased 1.7 million barrels.
The Federal Reserve remains in its premeeting communications blackout, leaving incoming economic releases as the principal influence on near-term interest rate expectations. 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 survey at 10 a.m. EDT. Traders will be particularly sensitive to signs of weakening labor-market conditions and changes in consumer inflation expectations ahead of next week's Fed decision. Softer employment and business activity data could reduce December tightening expectations and support gold through lower Treasury yields and a weaker dollar, while stronger readings or renewed inflation pressure would reinforce the argument for maintaining restrictive monetary policy.
The Strait of Hormuz and U.S.-Iran situation remained a significant source of uncertainty Wednesday, although crude oil prices eased as traders balanced continued military and shipping risks against signs of a recovery in regional petroleum exports. Attacks on vessels in the Persian Gulf and threats against Saudi Arabian infrastructure have maintained concerns about the reliability of energy shipments, while diplomatic contacts involving Washington and Tehran have yet to produce a confirmed agreement. Total crude exports from the Persian Gulf and alternative shipping routes have recovered to approximately 24 million barrels per day, exceeding prewar volumes, although roughly 40% of regional shipments now bypass the Strait of Hormuz, compared with 17% before the conflict. Direct traffic through the waterway remains disrupted, and continuing security threats, higher shipping costs and uncertainty about U.S.-Iran negotiations have prevented crude prices from returning to pre-conflict levels. December WTI futures settled at $97.15 a barrel, down 0.7%, while Brent crude finished near $108.82.
For gold, the decline in crude oil prices has eased some immediate inflation and interest rate pressure, while continuing uncertainty about Gulf security provides an underlying source of defensive demand. However, the recovery in broader equity markets and expectations for additional Fed tightening have limited the metal's safe-haven appeal. Silver has remained more sensitive to concerns about industrial demand and the direction of real interest rates, with recent price action reflecting profit-taking after Tuesday's advance. The contrasting pressures of geopolitical risk, weaker economic activity and still-elevated inflation expectations continue to complicate the outlook for both precious metals.
North American equity markets finished higher Wednesday, supported by strong corporate earnings and renewed buying interest in technology and artificial intelligence-related shares. The Dow Jones Industrial Average gained 360.21 points, or 0.69%, to close at 52,856.09, while the S&P 500 advanced 44.60 points, or 0.58%, to 7,757.17. The Nasdaq Composite climbed 278.04 points, or 1.05%, to 26,702.86, leading the major benchmarks higher as technology stocks recovered from last week's selling pressure. The Russell 2000 advanced 7.60 points, or 0.27%, to 2,781.02. Canada's S&P/TSX Composite Index also strengthened, rising 0.76% to close at 36,382.77, with broader equity sentiment benefiting from the recovery in U.S. shares. Better-than-expected corporate results helped offset concerns about elevated financing costs, artificial intelligence investment valuations and persistent geopolitical uncertainty.
European equity markets were mixed Wednesday as investors assessed corporate earnings, elevated energy prices and mounting fiscal concerns in France. The pan-European Stoxx 600 traded near unchanged during the session, while Germany's DAX slipped approximately 0.1% and France's CAC 40 gained around 0.1% in the latest independently confirmed market readings. The U.K.'s FTSE 100 declined approximately 0.2%, pressured by weaker mining shares. Corporate results produced sharp individual stock movements, with strong earnings supporting European technology and consumer companies while disappointing guidance weighed on retailers. The selloff in French government bonds remained another source of concern, with the country's benchmark 10-year yield rising above 5.0% for the first time since 2002. The spread over equivalent German government debt widened to approximately 157 basis points, reflecting growing investor unease about France's fiscal position and political instability.
The key outside markets see Nymex December WTI crude oil futures lower and settling at $97.15 a barrel, while Brent crude finished near $108.82. The yield on the benchmark 10-year U.S. Treasury note remained near the 5.1% area. The U.S. dollar index was softer, providing some support for gold even as expectations for additional Federal Reserve tightening remained elevated. (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 $4,142.52 to $4,162.00 resistance zone, with a sustained move targeting $4,180.00 and then $4,217.00. Bears' next near-term downside price objective is a break below $4,098.63, with deeper downside targets at $4,066.00 and then $3,942.00. First resistance is seen at $4,142.52 and then at $4,162.00. First support is seen at $4,127.10 and then at $4,098.63.
Spot silver bulls' next upside price objective is to drive prices back above the $57.860 to $58.799 resistance zone, with a sustained move targeting $60.000 and then $61.000. The next downside price objective for the bears is a break below $56.920, with deeper downside targets at $56.340 and then $56.000. First resistance is seen at $57.860 and then at $58.799. Next support is seen at $57.591 and then at $56.920.
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