Gold prices managed a modest advance in early trading Thursday, while silver fell sharply as a surge in oil prices and Treasury yields hovering near multi-decade highs kept inflation and interest-rate risks at the forefront for investors.
Spot gold was trading around $4,128 an ounce, up roughly 0.4% on the day. In contrast, spot silver dropped close to 1%, changing hands near $59 an ounce. The divergence highlighted the differing sensitivities of the two metals to the current macro backdrop.
The broader equities market also felt the strain. The Dow Jones Industrial Average shed 181 points, or 0.4%, while the S&P 500 declined 0.4% and the Nasdaq Composite slipped 0.5%. Investors were parsing the latest labor-market data for clues on the Federal Reserve's next policy move.
Jobless claims beat expectations
Initial jobless claims fell by 2,000 from the prior week to 197,000 for the week ending October 3, coming in below the 200,000 consensus forecast. On a four-week moving average basis, claims also declined, dropping from 200,500 to 198,000.
Stronger-than-expected labor-market data can weigh on gold, as resilient employment conditions may increase the likelihood of higher interest rates. However, the market's reaction was muted, with gold holding its gains. Earlier, September nonfarm payrolls came in at just 29,000, far below the 90,000 forecast, which had provided some relief to bullion investors by easing expectations for an October rate hike.
Oil rally adds to inflation concerns
Rising oil prices have emerged as another headwind for precious metals. Brent crude futures jumped more than 4% on Thursday to above $105 a barrel, while West Texas Intermediate crude climbed over 4% to surpass $92. The sharp move was driven by supply disruption worries, including President Donald Trump's statement that he no longer wanted a deal with Iran and reports of a planned U.S. offensive. Additionally, data from Kpler showed a sharp drop in the number of tankers crossing the Strait of Hormuz on Tuesday, as attacks on commercial vessels increased.
Higher oil prices can feed into inflation pressures, which in turn can boost expectations for higher interest rates. That creates a headwind for bullion, which does not generate interest income. Yet gold's demand remained firm on Thursday, even as silver struggled.
Yields keep pressure up
Treasury yields have stayed elevated as investors reassess the outlook for inflation and monetary policy. The combination of firm inflation expectations, higher oil prices, and elevated Treasury yields could continue to pressure both gold and silver.
Market participants will be watching bond-market demand and incoming economic data for further signals on the Fed's policy path. Persistent inflation, weak Treasury auction demand, or another oil-driven rise in yields could keep the pressure on bullion. Conversely, softer labor-market or sentiment data could provide support by easing expectations for additional rate increases.
This article is for informational purposes only and does not constitute financial advice.
