(Kitco NewsWire) - Spot gold and silver prices are sharply higher with extreme volatility in early U.S. trading Friday, after August core CPI rose more than expected and kept the Federal Reserve’s Sept. 15-16 rate decision tilted toward another hike. At the time of writing, spot gold was trading near $4,377.40 an ounce, up 1.38%, while spot silver was trading at $64.945, up 2.12% on the session.
The latest positioning remains rate-negative for precious metals. Headline CPI held at 3.4% year-over-year in August, in line with expectations, but core CPI rose 0.3% on the month, above forecasts for a 0.2% gain, while the annual core rate eased only to 2.4% from 2.5%. The report follows Thursday’s 0.4% monthly PPI increase and the ECB’s 25-basis-point rate hike, leaving traders reluctant to fade the higher-for-longer trade. Fed-hike odds had already moved into the upper-60% to low-70% area before the CPI release, and the core surprise keeps that pricing alive. The two-year Treasury yield is firmer, the 10-year yield is holding near the 4.95% area and the dollar is supported. For gold, the signal is straightforward: CPI was not hot enough to create a fresh panic, but it was not cool enough to rescue the Waller pause case.
Gold and silver are trading as a rates-and-dollar market, not as clean havens. Gold broke above the $4,341.10 200-day EMA reference after testing the lower end of the $4,315 to $4,288 support zone identified in the latest technical work. Silver is now outperforming gold after earlier losing the $65.60 to $65.718 moving-average band and breaking below $63.31. The geopolitical bid is still present, but the near-term driver is the real-rate channel into next week’s Fed decision.
The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations and defensive demand. The U.S. has made progress loosening Iran’s control over the strait and restricting Iranian exports, but the war is not close to resolved and shipping remains under pressure. Oil prices slipped Friday after Thursday’s surge, when Brent settled at $107.63 a barrel and WTI at $102.48, their highest closes since May 19. For gold, the setup remains conflicted: any reopening progress reduces the immediate haven impulse, but crude above $100 keeps the inflation channel alive and supports the Fed-hike case.
Global markets were mixed after the CPI release. U.S. stock-index futures were firmer after four straight losing sessions, but the rates reaction kept risk appetite fragile. European markets were mixed to weaker as investors weighed higher energy costs, the ECB’s rate hike and the U.S. inflation print. Asian markets were mixed, with bond yields and crude prices still setting the cross-asset tone.
The key outside markets see Nymex WTI crude oil prices lower but still trading above $100 a barrel, while Brent crude remained above $105. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.95% area. The U.S. dollar index is firmer. (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 $4,341.00 resistance level, with a sustained move targeting $4,375.00 and then $4,435.00. Bears' next near-term downside price objective is a break below $4,288.00, with deeper downside targets at $4,254.00 and then $4,218.00. First resistance is seen at $4,341.00 and then at $4,375.00. First support is seen at $4,288.00 and then at $4,254.00.
Spot silver bulls' next upside price objective is to drive prices back above $64.48, with a move above that level targeting $65.61 and then $66.70. The next downside price objective for the bears is a break below $62.55, with deeper downside targets at $61.37 and then $60.87. First resistance is seen at $64.48 and then at $65.61. Next support is seen at $62.55 and then at $61.37.
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