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Gold and silver prices edged lower in early U.S. trading on Monday as investors took a cautious stance ahead of the upcoming Federal Reserve minutes and amid an easing oil shock in the Strait of Hormuz. A stronger U.S. dollar and reduced energy risk premiums weighed on precious metals, offsetting the temporary support that came from softer U.S. employment data.

At mid-morning, spot gold traded near $4,139.80 an ounce, down 0.82%, while spot silver lost nearly 1%, hovering around $61.66. The move reflected a market caught between conflicting forces: moderating economic data that could justify delaying another rate hike, and a Federal Reserve still signaling that inflation remains the main threat.

Investors remain focused on the aftermath of the most recent Federal Open Market Committee (FOMC) meeting, where policymakers left the federal funds target range at 3.50% to 3.75%. The Fed’s statement reiterated its inflation-first stance, emphasizing that price growth remains stubbornly above the 2% target. Energy costs and global supply concerns continue to complicate the inflation picture, leaving the central bank with little room for complacency.

The weaker-than-expected June payrolls data temporarily challenged the Fed’s narrative. Nonfarm payrolls rose by just 57,000, while the unemployment rate ticked down to 4.2%. However, the labor force also contracted by 720,000, suggesting that the lower jobless rate was not entirely a sign of strength but rather of fewer people seeking work. Markets quickly recalibrated expectations, with the probability of a July interest rate hike slipping from 31.5% to 22%.

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Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX, described the U.S. labor market as “a mixed bag.” She emphasized that small-business hiring headwinds, a softer payroll headline, and unemployment declines have left traders pricing in only a 34% chance of another rate increase later in the year. For the gold market, that uncertainty has provided only fleeting support.

The geopolitical turbulence in the Middle East continues to cast a shadow over commodity markets, but tensions have modestly eased. The Strait of Hormuz—one of the world’s most critical oil shipping lanes—is seeing increased tanker activity, even as threats of harassment and mine risks persist. Oil prices dropped as OPEC+ announced that seven of its members will increase output by 188,000 barrels per day in August. Brent crude fell to $71.72 per barrel, while West Texas Intermediate (WTI) traded near $68.40.

The temporary stabilization in oil prices has removed some of the emergency premium that had been inflating safe-haven assets like gold. Still, O’Connell cautioned that the risk is not gone entirely, especially with talks involving Iran stalled during ceremonial mourning for Ayatollah Ali Khamenei. She noted that, although some tankers were transiting the strait, the region remains unpredictable.

Global markets reacted in varied fashion following the U.S. holiday weekend. S&P 500 futures rose roughly 0.5%, while Dow futures gained 0.1%. European equities also firmed modestly, while Asian markets delivered a mixed performance. Currency markets showed a firmer dollar, with the greenback rising to 162.29 yen and the euro slipping to $1.1419.

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The yield on the 10-year U.S. Treasury note hovered near 4.5%, suggesting that investors still expect longer-term inflation pressures to remain a concern. Typically, higher yields dampen gold’s appeal since bullion offers no yield or dividend, but traders remain wary of the Fed’s next move and potential volatility in the dollar.

Monday’s trading session was marked by caution, with investors awaiting economic updates including the S&P Global U.S. Services PMI, ISM Services PMI, and remarks from Fed Governor Christopher Waller later in the day. However, the main event for the week remains the release of the Fed’s June meeting minutes on Wednesday afternoon, which could reveal more about the central bank’s internal debate and whether officials are prepared to reengage with tightening later this year.

From a technical perspective, gold bulls have their eyes set on reclaiming the $4,257.63 level, which represents the 52-week moving average. A sustained move above that threshold could send prices toward $4,416.82 and potentially $4,481.78. On the bearish side, a drop below $4,069.54 could open the door to deeper retracements near $3,942.10.

Silver traders are watching key resistance at $63.40 and $63.47. Bulls aim for a move beyond the 52-week average at $63.47, which could open room toward $89.38. Support lies near $61.35 and $60.83, with a more significant breakdown potentially pointing toward the mid-$50 range.

Despite Monday’s pullback, the foundation for precious metals remains defined by macro uncertainty. Inflation continues to outpace the Fed’s comfort zone, geopolitical disruptions are far from over, and markets are on edge about policy missteps that could weaken growth. For many investors, gold’s real allure lies not in short-term rallies but in its resilience amid policy chaos and global instability.

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.