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.

Spot gold prices moved higher in early U.S. trading Thursday, while spot silver dropped sharply as rising oil prices and Treasury yields kept inflation and Fed tightening risk at the center of metals trading. At the time of writing, gold was near $4,128.20 an ounce, up 0.45%, while silver was near $58.830, down 1.40%.

The metals market remained caught between evidence of softer payroll growth and an inflation backdrop that continued to favor tighter monetary policy. The divide helped gold hold a modest gain, but silver came under heavier selling pressure.

Initial jobless claims fell to 197,000 in the week ended Oct. 3, a decline of 2,000 from the prior week’s revised reading. Continuing claims increased to 1.716 million for the week ended Sept. 26.

Last week’s payrolls report showed that only 29,000 jobs were added in September. However, Fed minutes released Wednesday showed that most policymakers still expected another rate increase by year end.

Treasury yields reflected that policy risk. The benchmark 10 year Treasury yield traded near the 5.3% area, while the 30 year yield remained close to highs not seen in 24 years.

Traders were also preparing for Thursday’s $22 billion auction of 30 year Treasury securities. The sale was set to test demand for longer duration debt after borrowing costs surged during the week.

Additional economic signals were approaching quickly. Markets were watching Friday’s preliminary October consumer sentiment report and next week’s consumer price index data for further direction on labor conditions, inflation expectations and the outlook for yields.

Softer labor or sentiment readings would support gold by reinforcing the slowdown visible in the payroll figures. Firm inflation expectations, weak Treasury auction demand or another oil fueled increase in yields would continue to pressure bullion.

The Strait of Hormuz and the situation involving the U.S. and Iran remained the leading risk for the oil market. That pressure also presented an indirect obstacle for gold because higher energy costs were lifting inflation expectations and Treasury yields.

Brent crude climbed above $104 a barrel, while WTI crude traded above $92 after another tanker was hit north of Qatar. Attacks on vessels around the Gulf and Hormuz reached their highest weekly pace since the Iran war began.

Hurricane related shutdowns in the U.S. Gulf added to the supply squeeze. About one quarter of current Gulf of Mexico oil production was shut in, adding another source of pressure to already elevated crude prices.

Geopolitical stress is normally supportive for gold, but Thursday’s market reaction was more complicated. Higher oil prices boosted inflation expectations, drove yields higher and weighed on both equities and silver.

Risk appetite weakened before the U.S. market opened. Dow futures fell 462 points, or 0.9%, while S&P 500 futures declined 39.5 points, or 0.5%, and Nasdaq 100 futures lost 231.75 points, or 0.73%.

Megacap technology and semiconductor shares moved lower as yields climbed. The retreat followed Wednesday’s pullback from record highs in the S&P 500 and Nasdaq, with traders focused on the approaching Treasury auction and its implications for borrowing costs.

Outside markets offered little relief for precious metals. Nymex WTI crude traded near $92.28 a barrel, Brent crude stood near $104.75, the U.S. dollar index was firmer and the 10 year Treasury yield remained near 5.3%.

Technically, gold bulls were seeking a recovery above the resistance zone from $4,151.29 to $4,199.06. A sustained move through that area would target $4,226.00 and then $4,230.51, while initial support was located at $4,118.19 and $4,103.00.

Gold bears were targeting a break below $4,118.19. Deeper downside objectives stood at $4,103.00 and $4,066.00, leaving the metal wedged between nearby support and a substantial overhead resistance zone.

For silver, bulls needed to reclaim the area between $60.451 and $61.162. A move above that zone would target $62.046 and then the 50 day moving average near $64.210.

Silver bears were looking for a break below $58.681. Additional downside targets were positioned at $57.000 and $54.780, while initial resistance remained at $60.451 and then $61.162.

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.