(Kitco NewsWire) – Spot gold prices were nearly flat and spot silver prices were slightly higher in early U.S. trading Friday, as dollar weakness and falling Treasury yields this week continued to support the precious metals after Thursday’s rebound. Federal Reserve Chairman Kevin Warsh refrained from signaling a rate hike in October during his remarks at International Monetary Fund meetings, reducing immediate expectations of tightening despite lingering inflationary pressures. At the time of writing, spot gold was trading near $4,172.10 an ounce, up $2.30, or 0.06%, while spot silver was trading near $57.630, up $0.330, or 0.57%.
Market positioning remains split between stubborn inflation and growing concerns about economic resilience. September’s CPI rose 0.6% on the month and 3.7% on the year, while Thursday’s producer price report showed a 1.3% monthly increase and an annual gain of 6.3%, the biggest monthly rise since March 2022. Producer energy prices jumped 10.8%, reinforcing fears that high crude and fuel costs could prolong inflation. Retail sales in September rose 0.8%, suggesting consumer demand remains resilient, while initial jobless claims rose slightly to 199,000.
Inflation data kept expectations of Federal Reserve tightening in December high, but prices for short-term rates have changed significantly. Following Warsh’s remarks in Bangkok, traders reduced the probability of an October rate hike to around 15%, while the probability of a December hike remained near 89%. The 10-year Treasury yield was trading near 5.11%, down about 14 basis points for the week as concerns over debt-financed investments in artificial intelligence helped fuel demand for government bonds. The dollar index fell toward 101.9, easing another source of pressure on bullion.
Friday’s import and export prices, the industrial production report and the Fed’s approaching communications blackout ahead of the meeting are immediate next considerations. Weaker economic data would reinforce the October trading pause and support gold, while persistent inflation keeps the prospect of further tightening and further pressure on yields ahead of the October 27-28 policy meeting.
The situation in the Strait of Hormuz and the situation between the United States and Iran remains a major source of geopolitical and energy market uncertainty, despite another modest drop in crude prices on Friday. Attacks on commercial vessels near the strait intensified in October, with two cargo ships sinking after separate incidents and other vessels reporting projectile hits. The lack of a lasting deal between the United States and Iran continues to threaten the stability of Middle East exports, even as some regional crude flows have recovered. The International Energy Agency’s decision to accelerate the release of about 100 million barrels of remaining emergency oil stocks helps ease immediate supply problems. However, U.S. crude inventories fell by 8.6 million barrels last week, while hurricane-related production disruptions and falling distillate inventories added stress to the physical market. Brent crude was trading near $105.26 a barrel and WTI was trading near $97.11.
For gold, the transmission remains mixed: geopolitical insecurity supports demand for safe haven assets, but high oil prices support inflation expectations and the risk of rising interest rates. Silver remains more vulnerable to changes in industrial sector sentiment, even as dollar weakness supports its recovery.
Global stock markets were mixed ahead of the U.S. open, as investors weighed Warsh’s comments and AI-related investment prospects. S&P 500 futures rose 0.2%, Dow futures gained 0.4% and Nasdaq futures slipped 0.1%. Asian stocks recovered some of Thursday’s sharp losses, with South Korea’s Kospi up 2.1% and Japan’s Nikkei 225 up 1.4%. European markets were mixed, with Germany’s DAX up around 1.0%, France’s CAC 40 up slightly and Britain’s FTSE 100 down slightly. Stabilization in stocks has reduced some of the immediate defensive demand, but concerns over financing large-scale AI infrastructure continue to support Treasuries.
Major overseas markets see Nymex WTI crude oil prices falling and trading near $97.11 per barrel, while Brent crude was near $105.26. The US dollar index is weaker and trading near 101.9. The yield on the 10-year US Treasury note is trading near the 5.11% area. The US dollar index is weaker and trading near 101.9. (The Kitco Global Index shows how much of gold’s current performance is driven by the dollar versus the gold market itself.)
Technically, the next upside objective for spot gold prices is to push prices back above the $4,201.00 to $4,217.40 resistance zone, with a sustained move targeting $4,230.51 and then $4,272.41. Bears’ next near-term downside price objective is a break below $4,141.97, with deeper downside targets at $4,073.55 and then $4,066.54. The first resistance is seen at $4,185.25 and then at $4,201.00. The first support is at $4,148.26 and then at $4,141.97.
The next upside price objective for spot silver is to bring prices back above the $57.856 to $58.276 area, with a move above this area targeting $59.370 and then $60.450. The next downside price objective for the bears is a break below $56.920, with deeper downside targets at $56.777 and then $56.340. The first resistance is seen at $57.856, then at $58.276. The next support lies at $57,390 and then at $56,920.
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