(Kitco NewsWire) – Spot gold and silver prices rallied sharply after the close Wednesday, as softer U.S. labor data, a weaker U.S. dollar and lower Treasury yields offset lingering expectations that the Federal Reserve could still tighten policy again in September. At the time of writing, spot gold was trading near $4,244.00 an ounce, up 4.11% on the session, while spot silver was trading at $61.880, up 4.16%.
The latest U.S. data left the market with a split macro signal. July private payrolls rose by 44,000, below the 75,000 consensus and down from a revised 95,000 in June, while annual pay growth for job stayers held at 4.4%. July services activity remained in expansion, with the ISM Services PMI at 54.1, business activity at 59.1, new orders at 57.2 and employment back in contraction at 47.4. The combination supported gold by cooling the most aggressive Fed-hike pricing, but the still-firm services and price components kept the market from fully abandoning the Fed’s inflation-risk narrative.
The Fed backdrop remains restrictive. The FOMC held the federal funds target range at 3.50% to 3.75% on July 29 in a 9-3 vote, with the implementation note keeping the reserve-balance rate at 3.65%. The press conference left the market focused on Chair Kevin Warsh’s willingness to tolerate tighter financial conditions rather than provide forward guidance. By Wednesday afternoon, traders were still pricing a roughly 59% probability of a 25-basis-point hike at the September meeting, while the 10-year Treasury yield was near the 4.6% area and the 2-year yield was near 4.2%.
The key outside markets saw Nymex WTI crude oil settle near $75.22 a barrel, down 0.7%, while Brent crude was near $79.45, up 0.1%. The U.S. dollar index was softer, and the yield on the benchmark 10-year U.S. Treasury note was trading near the 4.6% area. The softer dollar and lower real-rate impulse were supportive for gold, while easing crude oil stress reduced part of the inflation premium that had pushed yields higher in late July.
North American equity markets were mixed. The Dow Jones Industrial Average rose 263.24 points, or 0.49%, to a record 54,349.12, while the S&P 500 slipped 12.97 points, or 0.17%, to 7,723.55. The Nasdaq Composite fell 221.55 points, or 0.83%, to 26,363.44 as AI-linked names weighed on the index. Canada’s S&P/TSX Composite gained 344.83 points, or 0.96%, to 36,146.42, helped by resource shares and the sharp move in precious metals.
European equities closed firmer. The Stoxx Europe 600 rose 0.5% to 659.75, extending its record run, while London’s FTSE 100 gained 0.6%, Germany’s DAX rose 0.7% and France’s CAC 40 added 0.2%. Italy’s FTSE MIB and Spain’s IBEX 35 each advanced 0.5%, while Amsterdam’s AEX gained 0.2%.
The Strait of Hormuz situation remains the main geopolitical variable for gold, oil and risk assets. Iran and Oman said they had agreed on the coordinates of a proposed shipping route, while U.S. officials signaled that an interim deal could be close. The obstacle is still political and operational: Iran has tied any reopening to relief from the U.S. naval blockade of Iranian ports, while Washington has rejected arrangements that would give Tehran fee authority or excessive control over Gulf-bound traffic. The market impact Wednesday was relief in crude rather than a full geopolitical unwind, with oil capped by deal optimism but gold still supported by the fragility of any arrangement.
The U.S.-Japan yen intervention has created more currency uncertainty, providing yet another support for gold. The coordinated yen-buying operation pushed the dollar down from above 163 yen to below 160 yen, easing one source of global FX stress. For gold, the impact is mixed but net supportive in the short run: a stronger yen and softer dollar improve the mechanical dollar-gold channel, while the fact that Washington joined Japan in defending the yen raises questions about reserve-liquidity strains and the broader dollar system.
Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,250.00 level, with a sustained move targeting the $4,360.00 to $4,380.00 resistance zone. Bears’ next near-term downside price objective is a break below $4,180.00, with deeper downside targets at $4,020.00 to $4,040.00. First resistance is seen at $4,250.00 and then at $4,360.00. First support is seen at $4,180.00 and then at $4,040.00.
Spot silver bulls’ next upside price objective is to drive prices back above the $61.87 to $62.65 area, with a move above that zone targeting $63.09 and then the $65.00 to $66.00 resistance zone. The next downside price objective for the bears is a break below $60.09, with deeper downside targets at $59.32 and then the $56.00 to $57.00 support zone. First resistance is seen at $61.87 and then at $62.65. Next support is seen at $60.09 and then at $59.32.
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