(Kitco NewsWire) - Spot gold and silver prices were higher in late U.S. trading Monday, recovering some of last week's steep losses as declining crude oil prices eased inflation concerns and encouraged renewed buying interest in precious metals ahead of this week's Federal Reserve monetary policy decision. Diplomatic efforts involving Iran and several regional powers helped reduce some of the immediate geopolitical premium in energy markets, while expectations for additional Fed tightening continued to limit bullion's recovery. Gold climbed back above $4,000.00 an ounce during the session, while silver held above $54.000 after testing lower levels last week. Both metals remained vulnerable to changes in Treasury yields, the dollar and the outlook for U.S. interest rates.
Market positioning remains focused on an October Federal Reserve pause, followed by the possibility of additional tightening before year-end. The Federal Reserve remains in its premeeting communications blackout, leaving Tuesday's economic releases and Wednesday's policy announcement as the principal catalysts for interest rate expectations. September durable goods orders are due Tuesday at 8:30 a.m. EDT, followed by October consumer confidence, September new-home sales and the Richmond Fed manufacturing survey at 10 a.m. EDT. The Federal Open Market Committee will announce its interest rate decision Wednesday at 2 p.m. EDT, followed by Fed Chair Kevin Warsh's news conference at 2:30 p.m. EDT. Thursday brings the advance third-quarter gross domestic product report, September personal consumption expenditures inflation data and weekly initial jobless claims at 8:30 a.m. EDT. Softer inflation figures and less restrictive Fed guidance could reduce December rate hike expectations and support gold through lower yields and a weaker dollar, while resilient economic activity or persistent price pressure would strengthen the case for further monetary tightening.
The Strait of Hormuz and U.S.-Iran situation remained a significant source of uncertainty Monday, although renewed diplomatic activity helped ease some immediate fears of another escalation in the Middle East. Saudi Arabia, Turkey and Pakistan have been working to revive talks with Iranian officials in Tehran, seeking to reduce the risk of further military confrontation and restore more normal commercial shipping conditions through the strategic waterway. Saudi officials emphasized the importance of reopening diplomatic channels, while the broader dispute between Washington and Tehran over sanctions, maritime access and regional security remains unresolved. Continuing Houthi attacks involving Saudi Arabia and persistent threats to Gulf energy infrastructure have complicated efforts to stabilize the region. Although alternative export routes have helped mitigate disruptions to petroleum shipments, tanker security concerns and the possibility of renewed hostilities continue to sustain a substantial geopolitical premium in crude oil prices.
Oil prices retreated Monday as diplomatic developments encouraged some reduction in the immediate supply-risk premium. Brent crude futures settled at $115.81 a barrel, down 0.8%, ending a three-session advance, although prices remained close to recent multimonth highs. WTI crude also declined, trading near $102.00 during the afternoon. For gold, the retreat in crude oil prices reduced some energy-driven inflation pressure, helping the metal recover despite lingering expectations for another Fed rate increase. However, the absence of a confirmed settlement between Washington and Tehran leaves the possibility of renewed disruption to Gulf energy supplies. Silver also benefited from the improved precious metals sentiment, although concerns about manufacturing activity and restrictive borrowing costs continue to limit its near-term recovery.
North American equity markets closed higher Monday as investors responded to lower crude oil prices and encouraging corporate earnings while positioning for a week of major central bank decisions. The Dow Jones Industrial Average gained 146.42 points, or 0.28%, to close at 52,361.58, while the S&P 500 advanced 53.09 points, or 0.70%, to finish at 7,676.77. The Nasdaq Composite rose 214.04 points, or 0.82%, to 26,169.38, with technology shares recovering after recent volatility. The Russell 2000 gained 10.52 points, or 0.38%, to close at 2,786.42. Canada's S&P/TSX Composite Index also advanced, finishing near 35,926 points, up approximately 0.39%, with gains in financial and selected technology shares supporting the broader market despite weakness in some energy-related stocks. Investors remain focused on quarterly earnings from major U.S. technology companies and the outlook for borrowing costs, particularly as elevated artificial intelligence investment spending continues to influence corporate valuations.
European equity markets also finished higher Monday as stronger corporate updates and improving business sentiment helped offset concerns about elevated energy prices and restrictive monetary policy. The pan-European Stoxx 600 advanced 0.77% to close at 640.66, recovering some of last week's losses. Germany's DAX gained approximately 0.9%, supported by better-than-expected corporate results and an improvement in German business confidence. British technology services provider Computacenter surged more than 13% after raising its annual profit outlook, while Danish biotechnology company Genmab gained approximately 12% following encouraging clinical trial results. European defense shares advanced about 2.6%, while travel and leisure stocks gained 1.9%. The energy sector declined approximately 0.2% as crude oil prices retreated. Investor attention is now turning to Thursday's European Central Bank policy decision, with a pause widely anticipated despite continued concerns about inflation and the possibility of additional tightening in December.
The key outside markets see Nymex WTI crude oil prices lower and trading near $102.00 a barrel during the afternoon, while Brent crude futures settled at $115.81. The yield on the benchmark 10-year U.S. Treasury note remained below the 4.98% area. The U.S. dollar index was firmer as traders positioned for Wednesday's Federal Reserve decision, although the retreat in crude oil prices helped offset some of the pressure on precious metals from restrictive interest rate expectations. (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 $4,032.00 to $4,075.00 resistance zone, with a sustained move targeting $4,160.00 and then $4,180.00. Bears' next near-term downside price objective is a break below $3,946.00, with deeper downside targets at $3,890.00 and then $3,800.00. First resistance is seen at $4,032.00 and then at $4,075.00. First support is seen at $3,963.00 and then at $3,946.00.
Spot silver bulls' next upside price objective is to drive prices back above the $54.530 to $55.770 resistance zone, with a sustained move targeting $56.000 and then $57.000. The next downside price objective for the bears is a break below $53.460, with deeper downside targets at $52.410 and then $51.000. First resistance is seen at $54.530 and then at $55.770. Next support is seen at $53.460 and then at $52.410.
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