Gold, silver extend rally as dollar slide offsets higher yields - Kitco PM Report

Spot gold and silver prices experienced a rally on Friday, driven by a weaker U.S. dollar, fiscal-risk hedging, and ongoing uncertainty in the Strait of Hormuz, despite elevated Treasury yields. Spot gold was trading near $4,602.99 an ounce, up 1.86%, and spot silver was trading at $68.970, up 1.29%. North American equity markets closed higher, with the S&P 500 rising 0.4%, the Dow Jones Industrial Average gaining 1.0%, the Nasdaq Composite adding 0.4%, and the Russell 2000 increasing by 0.9%. European markets also finished higher, with the pan-European STOXX 600 up 0.59%, boosted by a 2.5% gain in basic resources as the softer dollar supported gold and mining shares. Market positioning reflects a contrast between stronger near-term activity data and a weaker dollar, reduced conviction for Fed rate hikes, and fiscal anxiety. The U.S. flash composite PMI rose to 56.0 in August, its strongest reading in over four years, led by services, although manufacturing slipped to a five-month low. Treasury yields remained elevated, with the 10-year yield near 4.7% and the 30-year yield near 5.3%. Fed minutes indicated some officials are still prepared to raise rates if inflation doesn't cool, but market pricing leans towards a September hold. Gold has maintained its breakout due to the dollar falling below 99.00, persistent fiscal concerns, and anticipation of the upcoming PCE inflation report and Fed Chair remarks. Precious metals have been a standout performer across asset classes. Gold traded as high as $4,632.90, surpassing its technical objective and holding above its 200-day moving average, while silver reached $70.14 before easing back. Silver has broken through several resistance levels this week, with the next focus on the $71.00 to $72.08 area. This move is supported by both macro factors, including the Treasury buyback announcement and the resulting rates-and-dollar reversal, and physical market dynamics, such as silver's industrial demand and deficit narrative. Geopolitical tensions in the Strait of Hormuz continue to influence oil prices, inflation expectations, and defensive demand, with U.S.-Iran peace talks stalled and U.S. preparing tougher sanctions. Oil prices remained elevated, with Brent near $93.29 a barrel and WTI near $84.34. Technically, gold's next upside objective is to break above $4,653.25 resistance, targeting $4,852.91, while downside targets are at $4,453.59 and lower. Silver bulls aim to push prices back above resistance levels, with the next upside objective targeting the $71.00 to $72.08 area.