(Kitco NewsWire) - Spot gold prices were lower and spot silver prices were sharply lower in late U.S. trading Tuesday, as traders cut exposure ahead of Wednesday’s U.S. inflation report while front-end Treasury yields and December Federal Reserve rate-hike risk remained firm. At the time of writing, spot gold was trading near $4,160.80 an ounce, down 0.24% on the session, while spot silver was trading near $59.090, down 1.82%.
North American equities closed slightly lower as bank earnings failed to offset renewed pressure on chip stocks. The S&P 500 fell 1.79 points, or less than 0.1%, to 7,805.45. The Dow Jones Industrial Average lost 180.45 points, or 0.3%, to 51,670.10. The Nasdaq Composite fell 41.52 points, or 0.2%, to 27,204.38, while the Russell 2000 dropped 11.11 points, or 0.4%, to 2,783.37.
European equities also closed mostly lower after a volatile session, with technology weakness offsetting the support from lower oil and easier long-end yields. The Stoxx Europe 600 fell 0.10% to 635.01. France’s CAC 40 lost 0.07% to 7,827.63, Germany’s DAX slipped 0.10% to 25,259.90 and the U.K. FTSE 100 declined 0.06% to 10,650.33. Italy’s FTSE MIB added 0.04% to 50,057.18.
Market positioning remains less hawkish for October but still exposed to December tightening risk. September payrolls rose by only 29,000, unemployment held at 4.2%, wages rose 0.1% on the month and July and August payrolls were revised down by a combined 60,000, while last week’s consumer-sentiment report showed weaker confidence and higher inflation expectations. Traders priced roughly a 19% chance of an October hike and an 88% probability of a December increase. The rate signal was mixed Tuesday: the 10-year Treasury yield pulled back toward 5.22% and the 30-year yield fell below 5.58%, but the 2-year yield moved above 4.81% as markets kept a year-end hike in the curve.
The next tests are September CPI Wednesday, September PPI Thursday, import and export prices Friday and Fed Chair Kevin Warsh’s remarks later this week. A softer CPI would support gold by easing real-rate and dollar pressure; a hot core print would likely reinforce December hike pricing and keep bullion capped below resistance.
The Strait of Hormuz and U.S.-Iran situation remains a supply-risk overhang, but Tuesday’s oil-market signal was mixed rather than one-directionally inflationary. Brent crude retreated after three sessions of gains as traders weighed the prospect of additional Russian diesel exports, while WTI settled higher as diesel strength, Saudi-Houthi escalation and tanker attacks around Hormuz kept U.S. crude bid. President Donald Trump accused Yemen’s Houthis of trying to drive up oil prices before the U.S. midterm elections and warned that Washington would not forget attacks on Saudi Arabia, while Saudi forces struck Houthi-held oil depots near Sanaa. Brent settled at $105.69 a barrel, down 0.9%, while WTI settled at $94.14, up 0.4%.
For gold, the channel remains two-sided: shipping risk and the U.S.-Iran war support defensive demand, but any renewed oil-driven inflation impulse would lift yields and the dollar, pressuring metals. For silver, the combination of chip-sector weakness, industrial-demand concerns and a higher gold/silver ratio amplified the downside.
The key outside markets see Nymex WTI crude oil prices higher and trading near $94.14 a barrel, while Brent crude settled lower near $105.69. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.2% area. The U.S. dollar index is softer but still elevated. (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 $4,217.15 to $4,227.00 resistance zone, with a sustained move targeting $4,273.36 and then $4,316.09. Bears’ next near-term downside price objective is a break below $4,144.57, with deeper downside targets at $4,110.33 and then $4,066.86. First resistance is seen at $4,180.98 and then at $4,207.24. First support is seen at $4,155.31 and then at $4,144.57.
Spot silver bulls’ next upside price objective is to drive prices back above the $59.773 to $60.614 area, with a move above that zone targeting $61.092 and then $61.720. The next downside price objective for the bears is a break below $58.740, with deeper downside targets at $57.640 and then $52.000. First resistance is seen at $59.773 and then at $60.614. Next support is seen at $58.740 and then at $57.640.
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