Gold and silver posted modest gains in early US trading on Tuesday, supported by a retreat in oil prices below the $100 mark and a slight easing in Treasury yields. Spot gold rose 0.15% to $4,145.67 per ounce, while spot silver added 0.4% to $60.77 per ounce as of 10:30 AM EDT.
The precious metals complex has been under pressure in recent weeks from rising bond yields and a firmer US dollar. However, Tuesday's pullback in crude oil and a dip in long-term yields provided some relief, allowing gold and silver to extend their rebound from earlier lows.
Rate hike expectations weigh on metals
Market participants are closely parsing signals from the Federal Reserve regarding the timing of its next policy move. Weak September payrolls have reduced the odds of an October rate hike, but persistent inflation pressures keep the possibility of a December increase alive. According to fed funds futures, there is a 78% probability that the Fed will hold rates steady at its October 28 meeting.
Investors will look to the release of the Federal Reserve's meeting minutes on Wednesday and a preliminary reading of consumer sentiment on Friday for further clues. Softer labor market or sentiment data could provide a tailwind for gold and silver, while any data that pushes yields higher would likely create headwinds for the metals.
Oil prices ease, supporting bullion
Oil prices fell below $100 a barrel on Tuesday, helping to alleviate near-term inflation concerns and reducing pressure on yields. Geopolitical risks around the Strait of Hormuz persist, but regional oil exports have returned to pre-Iran war levels. Additionally, the Group of Seven agreed to release 100 million barrels of crude oil and/or diesel fuel from strategic reserves, and Saudi Arabia cut November prices for its Arab Light crude sold into Asia.
The decline in oil prices is generally positive for gold and silver because it lowers inflation expectations and eases the upward pressure on bond yields.
Equities rally, but yields remain key
Global stock markets showed positive risk appetite on Tuesday. The Dow Jones Industrial Average rose 237 points, or 0.46%, while the S&P 500 hit a fresh all-time high of 7,835.09. The Nasdaq Composite gained 0.56%. In Europe, the Stoxx 600 index advanced 0.28%, and Japan's Nikkei 225 led Asian gains with a 1.05% rise.
Despite the equity rally, the fixed income market remains the dominant driver for precious metals. Long-term bond yields continue to exert the biggest influence on gold and silver prices.
Technical levels to watch
For gold, a breakout above the resistance zone of $4,203.61 to $4,230.51 is needed to open the path toward the next resistance at $4,319.61, followed by $4,330.43. On the downside, a drop below support at $4,103.52 could lead to a decline toward $3,996.06 and then $3,942.10.
Silver faces its own resistance zone at $61.744 to $63.060. A successful breakout above that range could propel the metal to $65.090 and then $66.000. Conversely, a fall below support at $59.960 might trigger a slide to $58.940 and subsequently $57.640.
This article is for informational purposes only and does not constitute financial advice.
