Precious metals rise as markets reassess Fed outlook
Gold and silver prices surged after Wednesday’s close as weaker-than-expected U.S. labor data, a softer U.S. dollar and lower Treasury yields provided support for precious metals.
Spot gold was trading near $4,244 per ounce, up 4.11% on the session, while spot silver reached $61.88, gaining 4.16%.
The move reflects changing market expectations, although investors continue to consider the possibility that the Federal Reserve could tighten monetary policy again in September.
Labor data sends mixed signals for the Federal Reserve
The latest U.S. economic indicators delivered a mixed picture. Private payrolls increased by 44,000 in July, below expectations of 75,000 and down from the revised 95,000 gain recorded in June.
At the same time, annual wage growth for workers who remained in their jobs held steady at 4.4%.
The services sector continued expanding in July, with the ISM Services PMI reaching 54.1. Business activity rose to 59.1, new orders reached 57.2, while employment returned to contraction territory at 47.4.
The combination of weaker employment data and continued services strength reduced expectations of a more aggressive Federal Reserve stance, supporting gold prices. However, resilient services activity and price indicators prevented markets from fully dismissing inflation concerns.
Fed policy remains restrictive
The Federal Reserve kept interest rates unchanged on July 29, maintaining the federal funds target range at 3.50% to 3.75% following a 9-3 vote by the Federal Open Market Committee.
Traders were still pricing in around a 59% probability of a 25-basis-point rate increase at the September meeting. The 10-year U.S. Treasury yield remained near 4.6%, while the two-year yield traded around 4.2%.
A weaker dollar and lower real yields supported gold prices, while easing energy market pressures reduced part of the inflation premium that had pushed yields higher in late July.
North American and European markets show mixed performance
U.S. equity markets ended the session mixed. The Dow Jones Industrial Average gained 263.24 points, or 0.49%, reaching a record close at 54,349.12 points.
The S&P 500 fell 12.97 points, or 0.17%, to 7,723.55, while the Nasdaq Composite dropped 221.55 points, or 0.83%, to 26,363.44 as artificial intelligence-related stocks faced pressure.
Canada’s S&P/TSX Composite increased by 344.83 points, or 0.96%, to 36,146.42, supported by resource companies and the strong performance of precious metals.
European markets finished higher. The Stoxx Europe 600 gained 0.5% to 659.75, extending its record run. London’s FTSE 100 rose 0.6%, Germany’s DAX advanced 0.7%, and France’s CAC 40 gained 0.2%.
Italy’s FTSE MIB and Spain’s IBEX 35 both increased 0.5%, while Amsterdam’s AEX gained 0.2%.
Strait of Hormuz remains key market driver
The situation surrounding the Strait of Hormuz remains one of the main geopolitical factors influencing gold, oil and risk assets.
Iran and Oman announced an agreement on the coordinates of a proposed shipping route, while U.S. officials indicated that an interim agreement could be close.
However, political and operational challenges remain. Iran has linked any reopening of the route to relief from the U.S. naval blockade of Iranian ports, while Washington has rejected arrangements that would give Tehran authority to impose fees or excessive control over Gulf shipping traffic.
The immediate market impact was reduced pressure on oil prices, although gold remained supported by uncertainty surrounding the potential agreement.
Yen intervention adds currency uncertainty
The coordinated U.S.-Japan intervention to strengthen the yen has introduced additional uncertainty into global currency markets.
The yen-buying operation pushed the dollar from above 163 yen to below 160 yen, easing some global foreign exchange pressure.
For gold, the impact is supportive in the short term, as a weaker dollar mechanically benefits dollar-denominated commodities and increases demand for safe-haven assets.
Gold and silver technical outlook
For spot gold, buyers are targeting a move above the $4,250 per ounce level. A sustained breakout could open the way toward resistance between $4,360 and $4,380.
On the downside, a break below $4,180 could expose prices to targets between $4,020 and $4,040. Initial resistance is seen at $4,250, while initial support is located at $4,180.
For silver, buyers are attempting to reclaim the $61.87 to $62.65 zone. A move above this range could push prices toward $63.09 and eventually the $65 to $66 resistance area.
The main support level for silver is at $60.09, followed by $59.32. A break below these levels could expose prices to the $56 to $57 support zone.
