WHAT YOU NEED TO KNOW
  • Spot gold rose 0.55% to about $4,132.30 an ounce, while silver dropped 1.03% to roughly $59.050.
  • A strong $22 billion Treasury auction helped longer maturity yields retreat from their morning highs.
  • Brent crude settled 4.1% higher at $104.28 as supply risks kept inflation concerns elevated.
  • U.S. equities closed mixed, while major European indexes declined under pressure from oil and sovereign yields.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.

Late U.S. trading Thursday delivered a split verdict for precious metals as gold advanced and silver retreated. A strong 30 year Treasury auction helped yields ease from their morning highs, while surging oil kept inflation concerns and the risk of Fed tightening later this year firmly in view.

Spot gold traded near $4,132.30 an ounce at the time of writing, gaining 0.55% during the session. Spot silver traded near $59.050, down 1.03%, as pressure on its industrial demand channel outweighed some of the support available to bullion.

North American equities finished mixed after a late retreat in Treasury yields offset part of the pressure from higher oil prices and a technology stock selloff. The S&P 500 dropped 36.41 points, or 0.5%, to 7,765.36.

The Dow Jones Industrial Average gained 51.77 points, or 0.1%, to close at 51,231.64. The Nasdaq Composite fell 345.35 points, or 1.3%, to 27,193.34, while the Russell 2000 added 0.92 point, less than 0.1%, to 2,794.13.

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European markets closed lower as the oil shock and renewed sovereign yield pressure hit banks, autos and health care. The Stoxx Europe 600 declined 0.75% to 625.51, while Germany’s DAX lost 1.18% to 24,806.97.

France’s CAC 40 fell 0.51% to 7,729.69, and the U.K. FTSE 100 declined 0.16% to 10,441.60. Italy’s FTSE MIB recorded the region’s sharpest listed drop, falling 1.35% to 49,297.88.

Market positioning remained less hawkish for October but exposed to the possibility of a December tightening move. Initial jobless claims declined to 197,000 last week, while continuing claims rose to 1.716 million, reinforcing the picture of a labor market marked by low layoffs and slow hiring.

September payrolls rose by only 29,000. Fed minutes and Thursday’s comments from Gov. Christopher Waller kept attention on additional tightening later this year, even as traders priced a low probability of an October increase and a much higher probability of a December move.

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The $22 billion 30 year Treasury auction cleared at 5.618% with a 2.54 bid to cover ratio. The result helped the 30 year yield retreat from the 5.7% area and pulled the 10 year yield toward the 5.2% area late in the session.

The next tests for the rate outlook include preliminary October consumer sentiment Friday at 10:00 a.m. ET and September CPI Wednesday at 8:30 a.m. ET. September PPI is scheduled for Thursday at 8:30 a.m. ET.

Softer inflation expectations or CPI would support gold by validating the payroll slowdown. Another oil driven increase in prices or weak demand for longer maturity debt would keep the yield channel working against bullion.

The Strait of Hormuz and the situation involving the U.S. and Iran remained the principal oil market risk and the main indirect pressure point for metals through inflation and yields. A tanker off Qatar was struck by multiple projectiles.

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Attacks on oil, LNG and LPG vessels around Hormuz reached their highest weekly level since the Iran war began. Transit volumes through the chokepoint also fell from the recovery levels reached in late September.

Brent crude settled 4.1% higher at $104.28 a barrel, while WTI traded near $91.60. Hurricane related shut ins in the Gulf of Mexico added to the supply shock, while the U.S. dollar index remained firmer.

Higher crude prices normally support gold through geopolitical demand, but Thursday’s dominant effect was inflationary. Oil lifted yields, pressured risk assets and weighed on silver’s industrial demand channel, while gold drew support from safe haven demand and the late session retreat in Treasury yields.

For gold, the next bullish objective is a move above resistance from $4,142.00 to $4,163.15, followed by targets at $4,184.00 and $4,226.00. A break below $4,103.00 would expose support at $4,067.00 and then $4,032.00.

Silver bulls face resistance from $59.960 to $61.190, with higher targets at $61.720 and $63.060. Bears are watching for a break below $58.940, which would bring $58.681 and $57.640 into focus.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.