Gold rose in early US trading on Tuesday as US Treasury yields eased and lower oil prices alleviated pressure on the metals complex.
Spot gold was trading at $4,145.67 an ounce, up 0.15%, and spot silver was down 0.4% at $60.77 an ounce, up 0.40% at 10:30 AM EDT.
Rising bond yields and a stronger US Dollar have both contributed to a decline in the prices of these precious metals in recent times.
The metals were helped by oil prices, which fell below $100 on Tuesday, aiding both to continue their rebound since chances of an October rate hike diminished.
Markets calculating Fed’s next move
Weak September payrolls softened expectations of a rate hike in October, but inflation pressure still keeps the possibility of one more rate hike this year alive.
Markets believe there is a 78% chance of the rate remaining the same at the Fed’s October 28 meeting.
What happens next will depend on upcoming signals from Fed speakers and data from Federal Reserve meeting minutes, which is scheduled to come out on Wednesday.
The preliminary October reading of consumer sentiment, slated for Friday release, also remains a key number.
Softer labor market or sentiment numbers could propel gold and silver, but data that propels yields back up will cause headwinds for the metals.
Oil eases, markets up
Geopolitical risk around the Strait of Hormuz continues even as regional oil exports returned to pre-Iran war levels.
Boosting supply further, the Group of Seven agreed to release 100 million barrels of crude oil and/or diesel fuel from their reserves.
The world’s largest oil exporter, Saudi Arabia, also cut November prices for its Arab Light crude oil for sale into Asia.
A fall in oil prices helps reduce near-term inflation pressure, which in turn aids gold as pressure on yields eases.
Positive risk appetite was evident across global stock markets, with Dow Jones up 237 points or 0.46%. The S&P 500 hit a new all-time high of 7,835.09 on Tuesday, and the Nasdaq Composite gained 0.56%.
Share prices in Europe were also up, with the Stoxx 600 index rising 0.28%, while in Asia, Japanese stocks saw the largest gain, with the Nikkei 225 index up 1.05%.
Yields key for gold, silver
In terms of cross-asset performance, the biggest influence continues to come from the fixed income market and long-term bond yields.
For gold, a breakout above the current resistance zone of $4,203.61 to $4,230.51 is needed to lift the metal to the next resistance level at $4,319.61, followed by $4,330.43.
Conversely, a drop below the support at $4,103.52 would see the price of the precious metal drop to $3,996.06 followed by $3,942.10.
For silver, a successful breakout above the resistance zone at $61.744 to $63.060 is needed to propel the metal to the next set of higher resistance levels at $65.090 followed by $66.000.
Conversely, a drop below the support at $59.960 would see prices drop to $58.940 followed by $57.640.
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