Gold edges higher, silver slips as oil keeps inflation risk alive - Kitco PM Report

Spot gold prices are modestly higher and spot silver prices are lower in late-afternoon U.S. trading Wednesday, as softer U.S. consumer- and producer-price reports pressured Treasury yields and the U.S. dollar, while renewed Strait of Hormuz tension kept crude oil prices elevated.

At the time of writing, spot gold was trading near $4,060.90 an ounce, up 0.23%, while spot silver was trading near $57.68, down 1.52% on the session.

Gold ’s session range was $4,016.60 to $4,081.50, leaving the metal above the $4,000 area but below the $4,091 to $4,104 resistance band that has capped the latest rebound attempt.

Silver ’s session range was $56.50 to $59.20, with the metal failing to sustain a move above $58.00 and remaining below the $60.00 to $62.00 resistance area.

North American equities closed higher as softer wholesale inflation and strong financial-sector earnings offset pressure from elevated oil prices.

The S&P 500 rose 28.81 points, or 0.4%, to 7,572.40, the Nasdaq Composite gained 162.22 points, or 0.6%, to 26,269.23, the Dow Jones Industrial Average added 150.37 points, or 0.3%, to 52,658.64 and the Russell 2000 rose 11.50 points, or 0.4%, to 2,976.26.

In Canada, the S&P/TSX Composite rose 95.66 points, or 0.27%, to 35,416.20.

European equities were mixed.

The STOXX Europe 600 rose 0.61 points, or 0.10%, to 642.71, France’s CAC 40 gained 15.58 points, or 0.19%, to 8,382.43, Germany’s DAX fell 147.50 points, or 0.59%, to 24,999.53 and London’s FTSE 100 slipped 13.47 points, or 0.13%, to 10,515.92.

Positioning after the latest CPI and PPI reports has shifted toward a less hawkish Fed path, but the move remains constrained by oil and Middle East risk.

Headline CPI fell 0.4% in June and slowed to 3.5% year over year, while core CPI was unchanged on the month and rose 2.6% year over year.

This morning’s PPI report reinforced that disinflation signal, with final demand prices down 0.3% in June, goods prices down 1.4% and services prices up 0.2%.

The annual PPI rate slowed to 5.5%, while final demand less food, energy and trade services rose 0.1% on the month and 5.1% from a year earlier.

July rate-hike odds fell toward 10%, while the probability of a September hike held near 43.9%.

The 10-year Treasury yield was near 4.56% late in the session and DXY fell to about 100.52, down 0.40%.

That gave gold room to hold above $4,000, even as silver underperformed on weaker momentum and a higher gold - silver ratio.

The Strait of Hormuz situation is best characterized as restricted and highly stressed transit under active military pressure, not a normalized shipping environment.

The U.S. reimposed a naval blockade on Iran and intensified airstrikes after attacks on ships moving through the strait, while Iran’s Revolutionary Guard threatened to halt regional energy exports if the blockade continues.

During the interim deal, some vessels had resumed passage along an Oman-side route under U.S. military oversight, but the latest escalation keeps maritime risk elevated.

For gold , the impact remains two-sided: geopolitical risk supports defensive demand, while higher oil prices feed inflation concerns and can lift yields.

For broader markets, the Wednesday trade was equities higher on softer inflation and earnings, the dollar weaker, yields lower and oil still carrying a Hormuz risk premium.

Traders are watching follow-through in Fed-rate expectations after the CPI and PPI prints, Fed Chair Kevin Warsh’s testimony and any fresh disruption to Hormuz shipping lanes.

A sustained move lower in yields would give gold a cleaner path to test $4,091 and $4,104, while another crude-oil spike would bring the inflation-rate channel back into focus.

The key outside markets see Nymex WTI crude oil prices firmer and trading around $71.51 a barrel.

The U.S. dollar index is lower and trading near 100.52.

The yield on the benchmark 10-year U.S. Treasury note is trading near the 4.56% area.