(Kitco NewsWire) – Spot gold prices were modestly lower and spot silver prices were weaker in late U.S. trading Wednesday, as cooler U.S. inflation data lowered October Fed hike expectations but failed to stop another rise in long-dated Treasury yields. At the time of writing, spot gold was trading near $4,156.10 an ounce, down 0.60% on the session, while spot silver was trading near $60.180, down 1.90%.
North American equities closed mixed to lower as technology strength was not enough to offset higher long-end yields. The S&P 500 fell 19.30 points, or 0.3%, to 7,651.54. The Dow Jones Industrial Average lost 443.87 points, or 0.9%, to 50,906.05. The Nasdaq Composite rose 63.52 points, or 0.2%, to 26,861.06, while the Russell 2000 fell 11.06 points, or 0.4%, to 2,796.86.
European equities closed lower as inflation concerns, higher energy prices and elevated bond yields weighed on risk appetite. The Stoxx Europe 600 fell 0.5% to 634.89. Germany’s DAX lost 0.79% to 25,199.19, France’s CAC 40 dropped 0.89% to 7,964.51, the U.K. FTSE 100 declined 0.29% to 10,606 and Italy’s FTSE MIB shed 0.84% to 51,371.98.
Market positioning turned less hawkish at the front end but remained defensive at the long end. August PCE inflation rose 0.3% on the month and 3.4% from a year earlier, below expectations, while core PCE rose 0.2% on the month and 3.0% year over year. ADP private payrolls rose by 90,000 in September, above expectations, and second-quarter GDP was revised up to a 2.2% annualized pace from 1.5%, keeping the growth backdrop firm. October Fed hike odds fell to about 37.1%, down from roughly 70.9% last week, but the 10-year Treasury yield rose to the 5.29% area and the 30-year yield held near 5.65%. Friday’s September employment report at 8:30 a.m. ET is now the main rate-path test. Softer payrolls would reinforce the gold-supportive repricing in Fed expectations; firmer payrolls would keep the yield channel pointed against non-yielding metals.
The Strait of Hormuz and U.S.-Iran situation remains unresolved and continues to feed the oil-inflation channel. U.S.-Iran peace talks are stalled, Qatar is pursuing shuttle diplomacy and President Donald Trump denied reports that Washington was prepared to offer sanctions relief or release frozen Iranian funds in return for concrete nuclear steps from Tehran. Saudi Arabia has resumed tanker loadings from Yanbu after restarting the East-West Pipeline, and Gulf exports have recovered materially, but a tanker transiting the strait was reported struck by an unknown projectile Wednesday. Brent crude settled near $103.50 a barrel, while WTI settled near $90.42. The market impact for gold remains mixed: lower Fed hike odds support bullion, but a persistent Hormuz premium keeps energy inflation, long yields and the dollar risk embedded in the trade.
The key outside markets see Nymex WTI crude oil prices higher and trading near $90.42 a barrel, while Brent crude settled near $103.50. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.3% area. The U.S. dollar index is off its two-month high but still firm. (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 $4,203.00 to $4,210.63 resistance zone, with a sustained move targeting $4,316.00 and then $4,322.00. Bears’ next near-term downside price objective is a break below $4,136.44, with deeper downside targets at $4,103.00 and then $3,942.00. First resistance is seen at $4,203.00 and then at $4,210.63. First support is seen at $4,136.44 and then at $4,103.00.
Spot silver bulls’ next upside price objective is to drive prices back above the $61.182 to $62.069 area, with a move above that zone targeting the $62.000 to $63.890 area and then $64.080. The next downside price objective for the bears is a break below $60.639, with deeper downside targets at $60.000 and then the $56.000 to $57.000 range. First resistance is seen at $61.182 and then at $62.069. Next support is seen at $60.639 and then at $60.000.
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