(Kitco NewsWire) - Gold and silver prices are higher in late-afternoon U.S. trading Monday, as the market balanced last week’s weak labor data against a rebound in oil prices, Treasury yields and Fed rate-hike expectations. At the time of writing, spot gold was trading near $4,358.71 an ounce, up 0.4%, while front-month silver futures settled at $65.106 an ounce, up 2.80% on the session.
North American equity markets slipped from record territory. The S&P 500 fell 4.53 points, or 0.1%, to 7,753.11, the Dow Jones Industrial Average fell 60.95 points, or 0.1%, to 53,975.98, the Nasdaq Composite lost 85.26 points, or 0.3%, to 26,605.36, and the Russell 2000 fell 17.10 points, or 0.6%, to 3,017.40. European markets were mixed to weaker, with London’s FTSE 100 down 0.5%, or 55 points, at 10,845, France’s CAC 40 down 0.1% and Germany’s DAX up 0.35%.
The latest market positioning remains defined by the collision between Friday’s payroll shock and Monday’s oil-driven inflation risk. July payrolls fell by 23,000, prior months were revised lower and last week’s data pushed the implied probability of a September Fed rate hike down to 44.4% from 54.7% before the release. That relief trade faded Monday as the rate-hike probability climbed back to 51.7%, while the 30-year Treasury yield rose 5 basis points to 5.244%, just below its July 31 closing high of 5.253%. The next test is July CPI Wednesday at 8:30 a.m. ET, followed by PPI Thursday at 8:30 a.m. ET and retail sales Friday at 8:30 a.m. ET.
The Strait of Hormuz remains the main geopolitical channel into inflation expectations. Iran’s latest position has reduced optimism around a quick reopening, with Tehran pressing demands including compensation tied to U.S. strikes. Oil prices rose as traders reassessed the timeline for a resumption of normal tanker flows through the strait. The immediate impact has been cross-asset: crude is higher, Treasury yields are firmer, Fed hike odds have recovered part of Friday’s drop and gold has held its bid despite the stronger rate backdrop.
The key outside markets see Nymex WTI crude oil prices firmer and trading near the $79.00 area, while Brent crude was near $85.00 a barrel. The U.S. dollar index is firmer. (Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.) The yield on the benchmark 10-year U.S. Treasury note is trading above the 4.7% area.
Technically, spot gold bulls' next upside price objective is to push prices back above the $4,360.00 to $4,380.00 resistance zone, with a sustained move targeting $4,480.00 and then $4,500.00. Bears' next near-term downside price objective is a break below $4,299.00, with deeper downside targets at $4,223.00 and then $4,147.00. First resistance is seen at $4,380.00 and then at $4,480.00. First support is seen at $4,299.00 and then at $4,223.00.
Spot silver bulls' next upside price objective is to drive prices back above the $65.53 area, with a move above that zone targeting $71.56 and then $74.63. The next downside price objective for the bears is a break below $63.00, with deeper downside targets at $61.00 and then $60.83. First resistance is seen at $65.53 and then at $71.56. Next support is seen at $63.00 and then at $61.00.
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