Gold jumps above $4,690 as oil tumbles, Wall Street closes at fresh records - Kitco PM Report
Spot gold prices are sharply higher and spot silver prices are also strongly firmer late in North American trading Wednesday, as weaker-than-expected U.S. labor data, a softer oil market and renewed geopolitical uncertainty supported perceived safe-haven demand for precious metals. At the time of writing, spot gold was trading near $4,694.05 an ounce, up 2.77%, while spot silver was trading at $77.350, up around 6.23% on the session.
The U.S. data flow leaned supportive for bullion. ADP said private-sector employment rose 109,000 in April, below the 118,000 consensus estimate and up from a revised 61,000 in March, reinforcing expectations that labor-market momentum is cooling ahead of Friday’s nonfarm payrolls report. Traders are now recalibrating expectations for the Fed’s rate path after Monday’s stronger factory-orders data and Tuesday’s mixed ISM services and JOLTS reports.
Policy-sensitive markets moved in metals’ favor during the U.S. session. Treasury yields eased after the ADP miss, while the U.S. dollar index softened as traders added to expectations for eventual Fed easing later this year. Oil prices also retreated sharply as reports circulated that Washington and Tehran were nearing a framework to reopen tanker traffic through the Persian Gulf, reducing part of the geopolitical risk premium embedded in crude.
The North American equity session closed strongly higher despite the weaker labor print, with lower oil prices and easing war concerns supporting risk appetite. The S&P 500 rose 1.5% to a record 7,365.12, the Dow Jones Industrial Average climbed 1.2% to 49,910.59 and the Nasdaq Composite jumped 2.0% to 25,838.94. The Russell 2000 gained 1.5% to 2,886.77. The Nasdaq, S&P 500 and Dow all rallied on rising hopes for a broader Iran ceasefire framework and continued strength in large-cap technology shares.
Geopolitical headlines remained fluid through the afternoon session. According to media reports, U.S. Central Command said it disabled a tanker attempting to violate a blockade near an Iranian port in the Gulf of Oman, while traders continued to assess the odds of a broader diplomatic framework to stabilize regional energy flows. The combination of falling oil prices and lingering geopolitical uncertainty helped both equities and precious metals rally simultaneously, an unusual but not unprecedented cross-asset setup.
The key outside markets see Nymex WTI crude oil prices sharply lower and trading around $95.33 a barrel, while Brent crude was near the $102 area. The U.S. dollar index is weaker. The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.3% area.
Technically, spot gold is extending its rebound after Monday’s sharp correction, with bulls’ next upside price objective to push prices above the $4,722.77 to $4,750 resistance zone, which would open the door to a move toward $4,800 to $4,850. Bears’ next near-term downside price objective is a break below $4,620.00, with deeper downside targets at $4,576.74 and then $4,540. First resistance is seen at $4,722.77 and then at $4,750. First support is seen at $4,620.00 and then at $4,576.74.
Spot silver bulls’ next upside price objective is to drive prices above the $78.00 to $79.50 resistance zone, with a move above that area targeting $80.00. The next downside price objective for the bears is a break below $75.50, with deeper downside targets at $74.00 and then $72.65. First resistance is seen at $78.00 and then at $79.50. Next support is seen at $75.50 and then at $74.00.
