(Kitco NewsWire) - Spot gold and silver prices are higher in early U.S. trading Friday, after July retail sales unexpectedly fell and reinforced the market’s view that the Federal Reserve is closer to holding rates steady in September. At the time of writing, spot gold was trading near $4,376.40 an ounce, up 0.60%, while spot silver was trading at $64.740, up 0.66% on the session.
The latest positioning shifted further toward a Fed hold after this morning’s retail sales report. July retail sales fell 0.6%, against expectations for a 0.1% increase, while sales excluding autos declined 0.3%. The miss followed Wednesday’s cooler CPI report and Thursday’s flat headline PPI print, leaving the market-implied probability of a 25-basis-point September rate hike near 32% to 33%, down from nearly 50% a week ago. The 10-year Treasury yield is trading near the 4.6% area, while the U.S. dollar index remains below 100.00. The softer consumer data are supportive for gold through the rates channel, but the move is capped by higher oil prices and the market’s focus on the University of Michigan sentiment report at 10 a.m. ET.
The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations and defensive demand. Two UAE tankers were attacked while trying to cross the strait, and Washington has signaled new economic-isolation measures against Iran while saying the U.S. blockade can be sustained indefinitely. Brent crude is trading near $88.50 a barrel and U.S. crude is near $82.80, keeping energy risk in the Fed debate even as the week’s inflation and spending data weaken the case for another hike. For gold, the impact remains two-sided: shipping risk supports safe-haven demand, while higher crude keeps inflation risk alive and limits the downside in Treasury yields.
Global markets were mixed ahead of the U.S. open. S&P 500 futures were little changed after the index logged its 27th record close of the year, Nasdaq futures edged higher and Dow futures slipped. In Europe, Germany’s DAX was modestly firmer, while France’s CAC 40 and the U.K.’s FTSE 100 were softer. Asian trade was mixed, with Japan higher and Hong Kong and mainland China weaker.
The key outside markets see Nymex WTI crude oil prices firmer and trading around $82.80 a barrel, while Brent crude was near $88.50. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.6% area. The U.S. dollar index is softer. (Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.)
Technically, spot gold bulls' next upside price objective is to push prices back above the $4,448.00 resistance level, with a sustained move targeting $4,575.00 and then $4,666.00. Bears' next near-term downside price objective is a break below $4,322.00, with deeper downside targets at $4,263.00 and then $4,205.00. First resistance is seen at $4,448.00 and then at $4,575.00. First support is seen at $4,330.00 and then at $4,322.00.
Spot silver bulls' next upside price objective is to drive prices back above $65.44, with a move above that level targeting $66.83. The next downside price objective for the bears is a break below $64.16, with deeper downside targets at $63.10 and then $62.04. First resistance is seen at $65.44 and then at $66.83. Next support is seen at $64.16 and then at $63.10.
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