Gold and silver climbed late in Monday’s U.S. session as a weaker dollar and a sharp drop in oil prices eased some inflation concerns. But stronger-than-expected jobs data kept expectations of another Federal Reserve rate hike in December elevated. Investors are now focused on Tuesday’s U.S. consumer price index (CPI) report for clues about inflation and the path of interest rates.
Spot gold rose $69.40, or 1.70%, to about $4,140.40 an ounce. Spot silver added $1.35, or 2.60%, to $53.320, outperforming gold. North American and European equities also recovered from last week’s technology-led sell-off.
Falling oil and a weaker dollar support metals
Oil prices tumbled on Monday as markets reassessed the possibility of easing U.S.-Iran tensions and improved oil transport. Brent crude futures settled down $5.75, or 5.85%, at $92.57 a barrel, while West Texas Intermediate (WTI) futures fell $3.98, or 4.38%, to $86.85. Both benchmarks extended their declines after settlement. Brent at one point fell by more than $7, reaching its lowest level since late August. It had already lost about 16% over the previous week.
Lower energy prices eased some concerns about persistent inflation and reduced the case for the Fed to keep policy restrictive for an extended period. However, uncertainty around the Strait of Hormuz and shipping security continued to affect oil markets. Geopolitical risk remained a source of support for safe-haven demand, though diplomatic progress reduced some immediate pressure.
The U.S. dollar index fell about 0.3% on Monday to around 101.88, providing an additional lift to dollar-priced gold and silver. Improving risk sentiment encouraged investors to trim some defensive dollar positions, while expectations of further U.S. rate increases limited the currency’s decline. Falling oil, elevated Treasury yields and a softer dollar point to competing forces shaping precious-metal prices.
Jobs data keep December rate-hike bets elevated
U.S. nonfarm payrolls increased by 165,000 in October, well above the roughly 65,000 expected by the market. The unemployment rate fell to 4.1% from 4.2%. Average hourly earnings rose 0.4% month over month and 3.1% year over year. Payrolls for August and September were revised up by a combined 84,000, adding to evidence that the labor market was stronger than previously estimated.
After the report, markets raised their expectations of another Fed rate increase in December. Interest-rate futures pricing on Monday afternoon implied an 82.2% probability of a 25-basis-point hike. The 10-year U.S. Treasury yield was near 4.86%, compared with about 4.55% for the more policy-sensitive two-year yield. Both remained high despite the drop in oil, reflecting continued concern about inflation and monetary policy.
The U.S. Labor Department is due to release October CPI at 8:30 a.m. Eastern time on Tuesday. Economists expect headline consumer prices to rise about 0.3% month over month, down from September’s 0.6%. Investors will also assess core inflation, which excludes food and energy, for signs that underlying price pressures are easing. A softer-than-expected reading could cool rate-hike expectations and put downward pressure on yields and the dollar, supporting gold. A stronger reading could reinforce the tightening signal from the jobs data and weigh on precious metals.
Key levels and the week’s remaining data
For gold, traders are watching whether prices can break above resistance at $4,147.62 and hold above that level and a descending trendline on the four-hour chart. A sustained move higher would put $4,200.09 and the $4,250 area in focus. Support is seen at $4,088.51, followed by $4,051.45 and $4,000 if that level gives way.
For silver, holding above the previously breached $53.107 area would keep $54.617 and $55 in view, with further resistance in the $56-to-$57 range. A drop below $51.153 would bring the next reference support at $49.989 into focus. These levels reflect technical areas under market observation; macroeconomic data remain a key influence on both metals.
The U.S. economic calendar also includes initial jobless claims on Thursday and October producer price index (PPI) data on Friday, both scheduled for 8:30 a.m. Eastern time. Fed officials are also expected to continue discussing inflation and the labor market. The Treasury market will be closed Wednesday for Veterans Day, while stock markets will remain open. For precious metals, the near-term questions are whether CPI will temper rate-hike expectations and whether elevated Treasury yields will continue to constrain gains.