Precious Metals Pull Back as Market Awaits US Inflation Data
Spot gold and silver prices retreated modestly Tuesday morning US time after gold reached a two-month high overnight. Investors took profits ahead of the closely watched US Consumer Price Index (CPI) report due Wednesday. At the time of writing, spot gold was priced at $1,986.30 per ounce, down 0.04%, while silver slipped 0.78% to $25.09 per ounce.
The release of weaker-than-expected US July nonfarm payrolls, showing a decrease of 23,000 jobs, has heightened concerns over economic growth. This labor data combined with ongoing inflation expectations has introduced volatility into market expectations regarding the Federal Reserve's policy path. Oil prices have rebounded recently, pushing the probability of a Fed rate hike in September to about 51.9%. The 10-year US Treasury yield touched 4.74%, nearing its highest since January 2025. The US dollar index remained steady near 99.83. Market consensus anticipates the CPI annual rate will edge down slightly from 3.5% to 3.4%.
Escalating Strait of Hormuz Tensions Impact Energy and Safe Havens
Geopolitical strains surrounding the Strait of Hormuz continue to unsettle energy and precious metals markets. Iran has signaled that a full reopening of the vital shipping corridor hinges on concessions from the United States. New US conditions for compensation have complicated negotiations, contributing to fluctuating Brent crude prices that briefly rose above $90 per barrel before pulling back. Meanwhile, US WTI crude held near $82 per barrel. Increased oil prices are boosting goldโs appeal as a safe haven, while simultaneously adding inflationary pressures that influence expectations for Federal Reserve policy.
Further tensions arose from an attack on a small cargo vessel near the Bab el-Mandeb strait in the Gulf of Aden, amplifying maritime security concerns in the Red Sea region. Investors remain vigilant in monitoring developments in this critical area.
Mixed Performance in Global Stock and Futures Markets
US stock index futures showed muted movement, with S&P 500 and Nasdaq futures inching up 0.1% to 0.3%, while Dow futures marginally declined by 0.1%. European markets were mixed: the French CAC 40 dipped 0.1%, Germany's DAX advanced 0.1%, and the UK's FTSE 100 remained flat. In the Asia-Pacific region, South Korea's KOSPI gained 0.7%, Hong Kong's Hang Seng fell 1.1%, Shanghai Composite declined 0.8%, and Australiaโs S&P/ASX 200 rose 0.2%. Tokyo markets were closed for a holiday.
Technical Insights Highlight Key Levels for Gold and Silver
Gold's short-term upside target zone lies between $2,030 and $2,050 per ounce. Sustained gains above this range could extend price action towards $2,060 and $2,080. On the downside, a break below $1,960 might trigger further declines to $1,930 or even $1,900. For silver, bulls are watching a breakout above $25.21-$25.80 to challenge resistance at $26.50 and $27.00. Bears will monitor whether support at $24.00 holds, as failure could lead to declines targeting $23.15 and $22.50.
Market participants are advised to closely follow Wednesday's US CPI release and ongoing developments in the Middle East, due to their potential influence on commodity and currency markets.